It is my birthday this week, and with it, I will be decidedly in my mid-thirties.
I usually observe this passage of time by indulging in a lot of free birthday meals and my favorite gym classes.
But the last two years my birthdays have looked a little different, last year because of hyperemesis and this year because of the growing COVID-19 pandemic.
Since I can’t mark the occasion with freebie pancakes and desserts, I am taking a few moments today to reflect on my early thirties – to acknowledge the life developments and regroup on changes I’d like to make moving forward.
Like New Years Resolutions 2.0, but with more face wrinkles.
For me, my thirites brought a new focus on prioritizing financial security. I have always been frugal and fiscally responsible, but the minute I turned 30, retirement suddenly felt so much more pressing and near than it did at 29.
I realized if I had gone straight into a job after college, I would be almost a decade into a career. My stints in graduate school and lack of computer programming experience suddenly made me feel really behind my peers.
With an eye on financial stability, I have been able to correct some of my early money missteps. I finally opened investment accounts, overcoming fears that I was too under-researched to select funds (robo-investing helped me pull the trigger!) and I focused my Ph.D. studies on acquiring statistical and data skills.
But even with these moves, I still made some financial mistakes in my early 30’s that I would change if I were to do it again.
Financial Mistake 1: Neglecting my Roth IRA
This one could have also been titled ‘Maybe Don’t Go Get a Phd.’
In addition to the obvious time out of earning a full salary, graduate school can also delay retirement savings. I missed out on key years of compounding interest from not having a 401k or equivalent while in graduate school.
More painfully, I wasn’t even able to contribute to my Roth IRA.
Even though I had the savings to be able to continue my Roth contributions, I was not legally eligible since my graduate fellowship was not classified as earned income. I will forever think about those lost years of retirement investing.
Financial Mistake 2: Disregarding high deductible health insurance plans
I was uninformed about high deductible health insurance plans (HDHP). I incorrectly thought that HDHP plans were ideal for healthy individuals that did not go to the doctor often.
With my skin cancer history and weird connective tissue, I assumed I was too much of a doctor power user for a high deductible plan to be financially beneficial.
When we were considering a pregnancy, I stuck with a standard health insurance plan, expecting it to be the best deal when anticipating a lot of medical costs.
But the problem was, I made these decisions solely off assumptions and never ran the numbers myself.
High deductible plans have lower monthly premiums and provide access to health savings accounts, which are a great tax-advantaged investment vehicle.
HSAs are funded with pre-tax dollars, and the account grows tax-free as long as the funds are spent on health expenses.
Running the numbers, I found that I could have been saving thousands of dollars on my health insurance premium costs by opting for the high deductible plan, even in years where I would hit the maximum out of pocket amount.
I also did not realize that with a high deductible plan, you pay the doctor the rate negotiated by the insurance company, which is often lower than the scary original charges listed on medical bills when they first come. I made the switch this year and wish I had done it sooner.
Financial Mistake 3: Focusing on savings instead of earning
A financial mistake I can’t seem to shake is focusing heavily on saving money instead of earning more money. Spending money has always been a stressor for me, so frugality is second nature.
There are times where I admittedly spend too much time or energy trying to save small amounts of money.
In reality, instead of using my time to hunt for savings, it would be more valuable to focus on increasing my earning potential.
Increasing or diversifying my income streams would likely have a greater return on investment than the few dollars I saved after scouring the internet for a coupon code.
Obviously, I’m not saying I want to be spendy, and I’ll always do at least a quick search for a discount, but I hope to find a better balance between effort and pay off.
Financial Mistake 4: Not becoming an expert in one thing
Now that I am solidly in my thirties, it feels like I should be the expert in at least one niche.
My education and career experience have allowed me to do a variety of interesting things. While this renaissance man approach helped me develop a wide wheelhouse, I’ve never become the go-to person for one thing.
I am very grateful for the scoop my past experiences have given me but as I enter this stage in my life, I feel a pull to niche down more than I have in the past.
My hope is that the added focus will also help me combat lingering imposter syndrome. Increased confidence in my skills and the value add I can provide should pay dividends in network building and future professional development.