These 3 Financial Mistakes in Your 30s Could Haunt You During Your 60s

Your 30s have the potential to be a rewarding period of life, but also one that's financially stressful. On the plus side, you may be more established in your career, which could lead to higher pay and more wiggle room in your budget for expenses like nice vacations. On the other hand, you may be grappling with sky-high child care costs.

You should know, either way, that the financial decisions you make in your 30s could impact your retirement in a big way. And these mistakes could cause your 60-something self to end up sorely disappointed.

1. Buying a house you can't really afford

In a housing market where home prices are elevated and mortgage rates are high, finding an affordable place to buy isn't easy. But if you take on too much house, you risk falling behind on your remaining bills. And you might also end up in a situation where you're spending so much to own your home that there's no money left over for your retirement savings.

As a general rule, your housing costs, including your monthly mortgage payments, insurance, and property taxes, should not exceed 30% of your take-home pay. If you stick to that limit, you might manage to cover your homeownership costs with minimal stress and still have money left over for other expenses and goals. But if you stretch your budget and end up spending 45% of your monthly income on a home, you could end up with costly debt and a retirement savings shortfall.

2. Raiding your IRA to buy a home

Individual retirement accounts typically impose a 10% early withdrawal penalty for removing funds before turning 59 1/2. However, there's an exception for first-time home buyers. You can remove up to $10,000 penalty-free for home-buying purposes if it's your first go-round.

You might think that tapping your IRA for a down payment is a smart move. But it could leave you short on savings later in life.

Let's say your IRA typically generates a yearly 10% return, which is in line with the stock market's average return over the past 50 years. A $10,000 withdrawal at age 35 to buy a home could cost you almost $175,000 by age 65 when you account for lost gains. That's a lot of money to be missing in your IRA by the time you reach retirement age.

3. Investing too conservatively

You may be inclined to play it safe in your IRA during your 30s to avoid large losses in that account. But your 30s are a good time to take on this kind of risk, since you have many years to ride out stock market volatility and come out ahead financially.

The 10% return the stock market has averaged over the past 50 years accounts for periods of growth and periods of decline. If you play it too safe in your IRA, you might end up with a nest egg that falls short of your needs.

Let's say you go all-in on stocks and generate a 10% yearly return in your IRA, all the while contributing $300 a month from ages 30 through 65. At that contribution rate and return, you'll have about $975,000 to retire on.

However, if you invest conservatively and only score a 6% return during that window, you'll only end up with about $401,000. That's a nice amount of money, but it's not $975,000.

You don't want your future self to end up shaking their head at 30-something you. So do your best to avoid these mistakes during your 30s. Steering clear of them could really impact your future in a positive way.