3 financial traps 30-year old Ghanaians must avoid according to an analyst

Financial planner, Patrick Baah Abankwa has advised Ghanaians in their 30s who earn between GH¢3,000 and GH¢15,000 a month to avoid three common financial mistakes that could prevent them from building wealth before turning 40.

In a post shared on Facebook, he identified rising lifestyle expenses, unplanned financial support for extended family members and keeping too much money in low-interest bank accounts as habits that can make it difficult for workers to build long-term financial security.

He said many professionals earn more as they grow in their careers but struggle to accumulate wealth because their spending increases alongside their income.Here are the three financial traps he says people should avoid.

Abankwa warned that people often increase their spending whenever they receive a salary increase or promotion.

For instance, someone earning GH¢4,000 a month may move to a more expensive apartment, buy a car with higher maintenance costs or spend more on outings after their income rises to GH¢10,000.

Although their earnings have increased, they may end up saving little because their expenses have also gone up.To avoid this, he advised workers to invest at least 50 per cent of every salary increase before upgrading their lifestyle.

Abankwa also warned against giving financial support to extended family members without setting a clear budget.

He acknowledged that helping relatives is an important part of Ghanaian culture but said it could affect personal financial stability when people regularly use their savings or investment money to meet family demands.

He advised workers to set aside a specific amount for family support each month and avoid exceeding it without carefully considering the consequences.

The financial planner said leaving large amounts of money in ordinary salary or current accounts that pay little or no interest could reduce its purchasing power over time as prices rise.

He noted that money sitting in the bank could lose value if inflation increases while the balance earns little interest.He advised workers to divide their money according to its purpose.

One portion should be kept as an emergency fund covering three to six months of essential living expenses. He suggested considering options such as Treasury bills or money market funds for this reserve.

Another portion should go towards long-term wealth creation through regular investments in diversified equity mutual funds, shares listed on the Ghana Stock Exchange or suitable long-term investment plans.

However, these investment options carry different levels of risk, fees and access restrictions. It is advised that you check the terms of any product before committing their money, especially funds they may need during an emergency.

Abankwa also recommended a budgeting approach that divides income into three main categories.Under the model, 50 per cent of monthly income goes towards essential needs such as rent, food, utilities and healthcare.

Another 30 per cent covers lifestyle expenses and family support, including outings and other personal spending.

The remaining 20 per cent is the minimum target for building assets, paying off debt, creating an emergency fund and investing.

So for someone earning GH¢5,000 monthly, this would mean GH¢2,500 for essential needs, GH¢1,500 for lifestyle and family support, and at least GH¢1,000 towards financial security and wealth creation.