10 Money Revelations in My 30s

A few things I’ve come to realize about money as I recently hit the mid-point of my 30s…

1. A successful financial life comes from increasing your career prospects and saving the difference, but that doesn’t happen with lifestyle creep. Most personal finance experts talk about how much you can save from cutting back, but very few talk about the benefits of finding ways to earn more money. A combination of the two helps with financial security, but the biggest thing most people have a hard time with is keeping their standard of living relatively constant when they do finally start making more money. The secret sauce comes from making more money while not wanting more stuff.

2. House payments act as a form of a fixed income investment. One of the best things about a fixed rate mortgage is the fact that you know exactly what your payments will be every single month of every single year you remain in that house. This is a great thing for financial planning purposes. And paying down your mortgage offers a guaranteed return based on the after-tax interest rate on your mortgage. Pay a little more each month and that return improves. Housing has not been a great investment historically. But being a homeowner offers a simple way to slowly turn a liability into a valuable asset that can provide psychic income.

3. It makes sense to pay up a little for good beer. This is something I did not value highly enough in my 20s as quantity won out over quality. Craft breweries might be getting a little out of control with some of their new flavors, but to me the number of new breweries popping up is one of the few bubbles where everyone wins.

4. It rarely makes sense to pay up for good wine. Expensive wine, on the other hand, is overrated. You shouldn’t have to pay more than $20-50 for a really good bottle of wine. In a tasting most people can’t tell the difference anyways.

5. Spending money on time is always a good investment. This one became even more apparent to me when my daughter came along, but it certainly makes sense when you want to focus more time on your career, as well. In the past there were a number of tasks that I would do myself out of principle alone. Why pay someone else for something I’m able to do myself? I’ve now realized that outsourcing makes sense when it gives you more time to do things that are really important to you.

6. How much money you make has diminishing returns over time. After a few years in the workforce many people will start to figure out their number. If I could only make $X a year I would be set. The problem is that once you reach that level there will always be another one and then another after that you’ll be striving for. It’s obviously not a bad thing to make more money, but making more money alone isn’t going to make you happy.

7. Experiences resonate more than material possessions. Whenever I get together with friends or family we’re always sharing stories about fun, funny or random things that happened in the past when we all got together. No one ever gets together to share stories about how fun it was to go on a shopping spree or buy a bunch of clothes or household items. Spending money on vacations or dinner with friends or time with family will almost always pay off. You can’t say the same about material possessions that tend to lose their luster in short order.

8. Buying a book is one of the best deals on the planet. I’m sure I’ve said this before, but it’s a pretty amazing deal when you’re able to spend $10-$20 to read a couple hundred pages of someone’s thoughts, stories or ideas that have been developed over a number of years along with months or even years of research to back it all up. Not all books are worth your time, but reading a good book is one of the more underrated investments there is.

9. Negotiating is an underrated money skill. I’m by no means an expert negotiator, but simply asking people and businesses for a break on price can go a long way. You don’t have to wait until you’re haggling for a car to negotiate either. There are plenty of different businesses that are willing to haggle on price — credit card companies, insurance providers, cable companies, banks, retailers, etc. The worst that can happen when you ask for a break on prices or fees is that someone will say no.

10. Saving money is a huge stress reducer. The best thing a savings or investment account can provide is peace of mind. It’s never fun to shell out money for house or car repairs or healthcare expenses, but it can take the stress level down a few notches when you realize that you have some savings in the bank that can act as a backstop when things invariably go wrong.

Further Reading:
Personal Finance is Personal

 

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  • Sam

    Point 9 (Negotiating is an underrated money skill).
    Agree. Also be generous enough to give a reasonable Tip when you get good and honest service. Goes a long way to get better service and better pricing for repeat purchases/contracts.

    • Tom

      I hate tipping. I’d prefer they just charge more to pay their employees. Why should we pay for their employees? It’s gotten to the point where so many expect a tip. You buy something and pay for delivery, and they want a tip. Get a coffee or Chinese food to go, and they want a tip. Where does it end? Pay the barber and he expects a tip, and so on. Get a massage that isn’t cheap, and they expect a tip. Tell you what, don’t charge me for your service, and if you do a great job, I’ll give you a great tip. That includes restaurants.

  • patrick k

    The psychic rewards of reading a good used hardback bought on Amazon….;~)

  • Mark Helm

    Ben,

    A long-term fixed rate mortgage that you can hold when rates increase and refinance when rates fall counts as one of the best gifts to the middle-class. It’s ridiculous when you think about it.

    Not only does it work in a cash flow sense; it protects against both inflation (payment stays flat as the value of the dollar gets cheaper) and, a bit more surprisingly, deflation, especially for retired clients.

    When the economy tanks and the stock market gets hammered, interest rates tend to fall. At just the point when retirees are looking at their shrunken portfolios and trying to figure out how to cut spending to deal with their lower principal, they can refinance their mortgage to a much lower payment due to the lower interest rate and because they’ve likely paid down the previous mortgage over the years.

    The lower mortgage payment goes a long way to making up for the reduce income that can come out of the portfolio.

    I know that people hate debt – and, often, for very good reasons. But a mortgage can be a useful tool for dealing with various economic situations. Of course, like any powerful tool (fire, guns, cars, etc.), it can be very dangerous when used incorrectly.

    Best,
    Mark Helm

    • I find that a fixed mortgage allows you to plan more efficiently and it helps you manage risk against interest rate fluctuations.

  • Jim Clark

    Besides buying a book, check out your local public library and if they don’t have it, see if they can get it on inter library loan. Nowadays there are a number of books you borrow with an ipad, kindle or similar device. You are paying for it already (and it isn’t a bad idea to support them).

  • Jim Clark

    Besides buying a book, check out your local public library and if they don’t have it, see if they can get it on inter library loan. Nowadays there are a number of books you borrow with an ipad, kindle or similar device. You are paying for it already (and it isn’t a bad idea to support them).

  • jz

    Strongly agree with paying up for craft beer. We are living in the golden era of beer brewing; exploit this opportunity.

    • How you guys feel about paying up for bourbon?

      • Berry R M Vrolings

        Don’t let us stop you doing so.. 🙂

  • jz

    Strongly agree with paying up for craft beer. We are living in the golden era of beer brewing; exploit this opportunity.

  • Tom

    i got a mortgage 3 years ago at 2.6%. I invested the money in the market and its up over 30%. I don’t want to make extra payments either. I also get to deduct the interest, so my true rate is much less. I’m retired and 65. If I ever need the money, it’s not tied up in a house.

  • Regarding #6, getting more rarely relieves the feeling of wanting more.

  • Hurrow

    I love 1 and 2, these are the two main areas that most people can easily do even if they actually don’t. People are obsessed with housing despite it being a pretty poor investment historically, but one of the good things about it is that it forces people to save which they otherwise wouldn’t do.

    I’d add a number 11 here. If you leave it up to people to save for their own retirement, most people won’t.

    It’s fine to think that in some world where everyone is rational they will, but that’s not the world we live in. In Australia for employees we have compulsory saving for retirement through superannuation (kinda a combination of a 401k and an IRA I think) and therefore those people actually do some saving for retirement. But those who are self employed don’t have to contribute, and for the most part they don’t and end up relying on government support.

  • John Richards

    Books are the one thing I’ve never budgeted. Besides the library, you can find discounted books on line. Books they are getting rid of cost $1, and I snagged ‘Random Walk’ that way. Used editions of classic investment books sell on Amazon for $0.01 plus shipping, so I pay about $5 each.

    I agree very much about the fixed rate mortgages, but be aware the other costs can change… we had two rare but legit events that led to claims, and the increased premiums were enormous. We’ll be shopping for new insurance shortly, most companies in this area won’t offer unless it’s been a year since the last claim.

  • Charles Humphrey

    Ben
    Your first point is crucial for long term financial security . Resisting the temptation to escalate ones life style does two things , it allows you to save but equally important it discourages developing spending habits that are unsustainable when the big earning years end . As a 69 year old comfotably retired lawyer I observe many of my colleagues working well into their seventies , in many cases because they did not understand the importance of avoiding over escalating their life style.
    Charles

  • Charles Humphrey

    Ben
    Your first point is crucial for long term financial security . Resisting the temptation to escalate ones life style does two things , it allows you to save but equally important it discourages developing spending habits that are unsustainable when the big earning years end . As a 69 year old comfotably retired lawyer I observe many of my colleagues working well into their seventies , in many cases because they did not understand the importance of avoiding over escalating their life style.
    Charles

  • Mike Turvey

    +1 on number 3

  • Financial-Fitness

    I agree with everything except the wine price range of $20-$50. I think you can a perfectly good wine for under $20, with some closer to $10.

    • Ben

      That’s true. My favorite red that I bought last weekend is like $12.99.

  • Financial-Fitness

    I agree with everything except the wine price range of $20-$50. I think you can a perfectly good wine for under $20, with some closer to $10.

  • Expensive wine is so overrated, but a nice craft beer. Yes!

  • Expensive wine is so overrated, but a nice craft beer. Yes!

  • PhysicianOnFIRE

    You had me at # 3 & 4. I have some small amount of bias, being a homebrewer and investor in a couple of those breweries that have bubbled up, but I’d rather pay double for a beer I enjoy. And unlike wine, I would say >90% of beers have a reasonable cost of up to about triple the cost of the cheaper beers.

    #10 is excellent as well. Saving more, and hence buying (and owning) less, makes every day much easier. Financial Independence can be a life changer.

    Best,
    -Physician on FIRE

  • PhysicianOnFIRE

    You had me at # 3 & 4. I have some small amount of bias, being a homebrewer and investor in a couple of those breweries that have bubbled up, but I’d rather pay double for a beer I enjoy. And unlike wine, I would say >90% of beers have a reasonable cost of up to about triple the cost of the cheaper beers.

    #10 is excellent as well. Saving more, and hence buying (and owning) less, makes every day much easier. Financial Independence can be a life changer.

    Best,
    -Physician on FIRE

  • Good list Ben. I could resonate with many of those points.

  • I agree! I’ve found that paying for quality goods and experiences are really the way to spend your money (as you occasionally should). We used to bleed our budget by purchasing subpar drinks, food, clothes, etc. But it really comes down to paying just slightly more for something that’s better by leaps and bounds.

  • I’d reconsider #2. As many discovered during the last recession, a mortgage can be anchor & an albatross around your neck in a bad job market. A house payment limits not only your mobility but also has a severe negative impact on your wealth & your credit score if you have to walk away from the mortgage or short sell so that you can relocate to where the jobs are.

    For yonger people, maybe for everyone, but for younger people especially, it is more important than ever to remain free of encumberances that limit job growth & mobility. The homeowner fetish & tax preferences in America made the last recession far worse than it had to be.