The 12 dumbest things to do with your money in your 30s

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Your 30s present a whole new set of expenses and financial challenges - be prepared to deal with them.

Time is still very much on your side in your 30s - if you manage your money well, it can mean huge financial gains in the future.

That's easier said than done. Plus, many of us tend to assume we'll have more money in our 40s and have plenty of time to tune up our finances, which can lead to some poor money decisions.

Here are 12 of the worst, and how to combat them:

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The 12 dumbest things to do with your money in your 30s

1. Not taking advantage of work benefits.

If you're not taking full advantage of your employee benefits, you're leaving money on the table. Some of the more overlooked, yet incredibly advantageous, benefits include:

Healthcare flexible spending account (FSA). This type of account is a pre-tax benefit account you can use to cover a variety of healthcare products and services, from acupuncture and physical therapy, to vaccines and over-the-counter medicine. You can put up to $2,550 of tax-free money into this account in 2015, and save about 30% on healthcare expenses with the tax break, WageWorks reports.

Dependent care flexible spending account. If you have young children, dependent care FSAs are worth considering. This account works very similarly to the healthcare FSA, in that you can contribute pre-tax money, but is specific for dependent care services, such as preschool, summer camp, daycare, or before and after school programs.

Commuter benefits. These are often overlooked, but they can save you over $600 each year, WageWorks tells the Wall Street Journal. The concept is simple: Employees can use pre-tax money from their paychecks to cover mass-transit passes — including the train, subway, bus, and ferry — and parking.

It's worth it to research and talk to your human resources department to understand the scope of what's available to you, as these benefits could save you thousands of dollars each year.

The 12 dumbest things to do with your money in your 30s

2. Not increasing your 401(k) contributions.

In your 30s, one of the greatest things you have going for you is time, and the more money you can save at an early age, the greater the dividends will be down the road. You should already be contributing to your employer's 401(k) retirement account and taking full advantage of any available company match program, but if you get a pay raise or bonus, increase that contribution.

Also, get in the habit of upping your contribution at the end of each year, even if it's just 1%. Check online to see if you can set up "auto-increase," which will automatically increase your contributions every year.

The 12 dumbest things to do with your money in your 30s

3. Only putting money towards a 401(k).

By the time you're in your 30s, you should be considering other investment vehicles beyond just your 401(k) plan. A good next step is to put money towards a Roth IRA, another retirement savings vehicle that offers tax benefits and is particularly well-suited to younger people who earn less than the income cap ($116,000 a year or less for individuals; $183,000 or less for married couples filing jointly).

Contributions to this type of fund are taxed when they're made, so you can withdraw the contributions and earnings tax-free once you reach age 59 1/2.

If you still have money left over, you can research low-cost index funds, which legendary investors Warren Buffett and Jack Bogle recommend, and look into the online investment platforms known as "robo-advisers."

The 12 dumbest things to do with your money in your 30s

4. Not setting aside money for the big, upcoming purchases.

Your 30s are bound to be filled with big purchases — a home, car, and kids, to name a few — that require diligent saving.

The best way to prepare for these expenses is to start by creating savings goals, and then set aside money as early as possible. Mint, LearnVest, and You Need A Budget are online tools that allow you to create savings goals and see your progress.

It's important to contribute money towards a retirement fund, but don't forget about and neglect other major expenses. You'll want to have savings if you're planning on having kids — the average cost to raise a child is about $245,000, and that doesn't include college — or looking to buy a home, which often requires significant savings just for the down payment.

The 12 dumbest things to do with your money in your 30s

5. Neglecting disability insurance.

One type of insurance that gets neglected more so than others is long-term disability insurance — which provides income should you become disabled and can't work — but not having it can be extremely risky. Particularly in your 30s, one of your biggest assets is your ability to work and earn a living over your lifetime, so protecting against the possibility of becoming disabled is very important.

"A lot of people will pick up group life insurance, which will cover you if you die," explains Michael Egan, certified financial planner and partner at Egan, Berger & Weiner, LLC. "But they don't think about the disability — especially if it's not paid for by the company — and that's your bigger risk. You're not dead, but you can't work, so now you have to watch yourself go broke."

If you are traditionally employed, you should be able to secure a policy through your employer, while people who are self-employed will have to take out an individual policy. You can also supplement your employer's policy by buying private policies, which some people prefer to do, particularly those with dependents.

The 12 dumbest things to do with your money in your 30s

6. Neglecting life insurance.

Life insurance, like disability insurance, is meant to replace your income for those relying on it should something go wrong. It's also highly underused: According to nonprofit, over 40% of the American population doesn't have it.

Life insurance is most crucial for those with dependents — such as minor children or a spouse who doesn't work — so it applies to many 30-somes, who have recently started a family (or are about to).

You can calculate your coverage needs at Again, many people will be able to get coverage through their employers, but not always as much as they need. Some experts recommend replacing up to 10 times your annual income.

The 12 dumbest things to do with your money in your 30s

7. Trying to keep up with the Joneses.

While living up to your neighbors' or coworkers' standards can be tempting, it can also be detrimental to your finances.

"You have to monitor your spending and limit aspirational purchases," emphasizes Mark Avallone, certified financial planner and president at Potomac Wealth Advisors. "Just because you see other people enjoying a certain level of a lifestyle doesn't mean you can, or should be doing the same."

The best way to avoid this pitfall is to create a written financial plan to outline your budget and savings goals. "Without a written financial plan, there's no destination in mind, and there's no tangible concept of how much is needed to be saved," says Avallone. "But if you have structure in your monthly budget, you know what you can and cannot afford."

The more you can save, the better, but it's important to include some personal luxuries in the spending plan, Avallone notes: "Everyone's budget should include the essentials, but it should also include fun items. Otherwise, the savings plan will not work. It's very similar to a diet that doesn't allow the person to have a few treats and special meals: If they're not allowed to enjoy those aspects, they'll get off the diet entirely."

The 12 dumbest things to do with your money in your 30s

8. Not determining who pays for what when you get married or set up a household.

Discussing your personal finances, spending patterns, and financial plan with your partner is crucial, and one of the most important conversations to have is about who will be paying for what.

"Spell out who's responsible for paying which bills," writes David Bach in his book "Smart Couples Finish Rich." "You shouldn't assume that both you and your partner are somehow automatically on the same page when it comes to the question of how you are going to organize your finances and who is going to be responsible for what. If you haven't already done so, the two of you need to sit down together and specifically work all this out. The alternative is chaos and potentially major strife."

It can be helpful to have a joint account to provide the funds for the household bills, Bach recommends, but it's also important for each partner to have their own money. "Regardless of whether or not you both work, each of you should maintain your own checking and credit card accounts," he writes. "It's not a matter of hiding anything; it's that we all need a certain amount of privacy."

The 12 dumbest things to do with your money in your 30s

9. Overspending on the first kid.

When the first kid comes along, what tends to happen is that new parents will overspend on top-of-the-line cribs, bottles, clothes, and nursery accessories, says Brandon Moss, certified financial planner and VP of wealth adviser management at United Capital.

"Spending issues that we tend to see in 20-somethings will level out until the kids come along," he tells Business Insider. "And then it explodes."

You want to raise your child in a comfortable environment, but check yourself before dropping a couple grand on that fancy stroller and draining your savings, as there are bound to be unexpected costs to arise. To get an idea of what you might need to cover, read about the costs new parents didn't see coming.

The 12 dumbest things to do with your money in your 30s

10. Not contributing towards a college-savings plan.

In many of America's top colleges, the total cost for the academic year tops $60,000, and is only getting more expensive every year. Like most financial goals, the earlier you start saving, the better. Plus, time has a way of flying by, and before you know it, you'll be responsible for a hefty tuition bill.

Rather than splurging on pricey strollers and designer baby clothes, redirect that money into a 529 savings plan, a state-sponsored, tax-advantaged investment account. These plans allow a parent to contribute up to $14,000 per year ($28,000 for a couple) for each of their children's college educations. It also allows anyone — a grandparent, godparent, or particularly generous neighbor — to contribute to the fund.

The 12 dumbest things to do with your money in your 30s

11. Going to graduate school for the wrong reasons.

Graduate school comes with a hefty price tag, which is why you want to be positive you're going back to school for the right reasons, especially if you're paying for it out of your own pocket.

It should definitively aid your career track, Egan says. He gives the example of getting your MBA: "If you don't know what you're targeting to do after you get the MBA, that's not the right path. If getting your MBA will help you secure a position that you want for your long-term career, then it's a perfect solution."

He also recommends treating graduate school as a second job, and not taking time off work to earn your degree, if possible.

The 12 dumbest things to do with your money in your 30s

12. Not revisiting and adjusting your investments.

You can't just "set and forget" your investments forever. Life happens, and there are times — particularly big life changes — when it's smart to make financial adjustments.

For example, if you decide to retire early, you'll need to readjust your time horizon and the amount of risk you choose to take in your portfolio.

As your money grows, and as you get closer to the end of your time horizon, the original portfolio you created may no longer suit your needs — revisit it every year and adjust it to fit your current situation if needed.

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