A Common Money Mistake to Avoid in Your 30s

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In this post, I want to address a common money mistake people can make in their 30s. While this is a mistake people can make at any age, it’s especially important for people in their 30s to avoid it if their aim is to start reaching some of their financial goals, like paying off debt, growing their savings, and building wealth.

Here’s the mistake. When people’s paycheck arrives, they may look at all that money available to them and think, “How can I use this money now?” And so they find ways to use it now.

In addition to paying bills—but possibly not paying off their credit card statement balance in full—they may use the money for eating out, splurging on new technology, and buying those really cute shoes they didn’t need but just had to have.

And then they wonder where their money goes each month. And why, even when the amount on that paycheck increases—or the amount coming in from their business—they still don’t have more money leftover at the end of the month.

This phenomenon—spending more as you earn or receive more—is called lifestyle inflation or lifestyle creep. And it can keep people from reaching their financial goals, like paying back debt or becoming financially free. In this post, I offer tips on how to avoid it.

Here, though, I want to talk more specifically about how this “use my full paycheck now” mentality can keep you from reaching your financial goals in your 30s.

How This Mentality Can Make It Harder to Reach Money Goals

If your goal is to pay off debt, have a certain amount in savings, or build wealth for yourself, you can’t be using this short-term thinking when it comes to your finances. You have to think long-term, something I also address here.

Short-term thinking is, “How can I use this money now?”

Long-term thinking is, “How can I save and invest for the future?”

What you want to do is have a system in place that allows you to enjoy some of your money now, have enough to pay for your needs, and then also have money to save and invest for the future. Because saving and investing is where real wealth is built.

This is an essential piece people can miss when it comes to things like getting rich and building wealth. People may think getting rich comes down to how much money you have coming in. And so, they may think only people with large salaries can get rich or be in a position to build wealth.

But as you can see from the phenomenon that is lifestyle inflation, more money doesn’t necessarily mean automatic riches or wealth. It’s not how much you have coming in that makes you wealthy, it’s how much you save and invest. That’s actually the second of the 5 Principles of Wealth-Building.

People can get rich on a modest salary by saving and investing wisely. And people can be living paycheck-to-paycheck even while earning six figures or more.

So, if you find yourself falling into this “use my full paycheck now” mentality, here are four tips to help you avoid it.

4 Tips to Help You Avoid the “Use My Full Paycheck Now” Mentality

1. Work on your money mindset.

   Your money mindset is essentially your thoughts and beliefs about money. And based on those thoughts and beliefs, you’ll behave in certain ways around money. If you want to transform your relationship with this beautiful resource, you have to start with your mindset. This is something I learned from the book Secrets of the Millionaire Mind by T. Harv Eker.
   
   For advice on how to start transforming your money mindset, you can check out this post.

2. Automate your savings.

   I find this concept to be genius. Set up a system with your bank so that, whenever you receive money, a certain amount is automatically put into a savings account (ideally a high-yield savings account). This way, you’re much less likely to be tempted to use your entire paycheck when you receive it.

3. Set financial goals.

   Sometimes it can be hard to find the discipline to save and invest when you don’t have specific goals you’re working toward. So, you might want to take time to set some financial goals for yourself. Being debt-free, becoming financially free, and building wealth are examples.
   
   But even when we’re talking about building wealth, for example, what exactly does that look like to you? Is it having a certain amount in savings and investments? Is it having enough to stop working out of necessity? Is it having enough to donate generously to your favorite causes? Is it having a certain net worth?
   
   Really take time to think about what wealth looks like to you. And all of these can be financial goals you’re working toward that can help make it easier to stick to your budget and avoid spending everything you make—or even more.

4. Set a budget that suits your personality and lifestyle.

   There are many different methods people can use to budget. But if you’re going to use one, the important thing is that it suits your personality and lifestyle. (Here, I also present some money mindset shifts that might make budgeting easier.)
   
   For instance, some people may have success using a budgeting app. Others may prefer a simple spreadsheet. Whether you want to go simple or high-tech depends on how hands-on you want to be and how comfortable you are being high-tech with your finances.
   
   When it comes to how to divide your money, you can consider principles like the 50/30/20 rule, which essentially says that you use 50% of your after-tax income on needs, 30% on wants, and 20% on savings and paying back debt.
   
   Though this method may not work for everyone, it gives you an idea of how you can have a budget that doesn’t feel too restrictive because it allows you to enjoy some of your money now while taking care of your needs and planning for the future. It can also help curb lifestyle inflation because it will allow you to use more of your money as your income increases while still making sure you’re not spending too much on non-necessities.
   
   If you find yourself dealing with a lot of debt, though, I personally like the idea of paying it back aggressively—like by increasing the amount you set aside for debt repayment and paying more than the minimum payment for debts that don’t have prepayment penalties.
   
   (Some loans have penalties for paying them off early, so make sure you check your loan terms before doing this. Also, if you choose to prepay, make sure that you’re making payments toward the principal.)
   
   If you’re going to be focusing on debt repayment, include that in your budget. You might want to reduce the amount you set aside for wants—at least temporarily—while you do this. Or you could try to increase your income with a side hustle or passive income source.
   
   If you struggle with overspending, though, you might want to work on managing the money you do have before trying to make more. (This is also a suggestion from the book Secrets of the Millionaire Mind.)

Final Thoughts

If you want to reach your financial goals—like paying off debt or building wealth—you have to think long-term. You do want to be able to enjoy some of your money now, but you also want to have enough to comfortably pay for your needs, pay off your debt as quickly as possible, and save and invest for the future. I hope the information in this post helps you do just that.

And now, I want to leave you with this question. What’s one thing you can do today to start showing yourself that you’re thinking long-term when it comes to your finances?

~ Ashley C.

P.S. If you would like to start transforming your relationship with money, feel free to subscribe to the Alternative Money Mindset newsletter. There, I offer tips and advice on topics like budgeting, paying back debt, and building wealth with love. Don’t miss out!

Note: The advice presented here is for informational purposes only. If you’re in need of professional financial advice, please see a qualified professional.