Early financial maturity can greatly enhance the quality of your later years. As you enter your 30s, setting financial goals becomes essential, and as you approach retirement, you need to manage your money more shrewdly.
Even though managing your finances is essential as soon as you start earning money, making financial plans in your 30s can help you get ready for your later years. So, here are five financial planning tips you should know that will help you achieve your objectives and secure your future.
1.Set your financial goals
No matter what a financial advisor or your friends and family tell you, only you understand your priorities in life. You need to set financial goals on the basis of how you want your financial life to be. Do you want to purchase a house? Do you want to move? Do you want to start a family?
Outline your short- and long-term goals in writing. These objectives will influence how you view money. Budgeting is made simpler because you already know the outcome from the beginning.
2. Budget your expenses
The most straightforward method for creating a budget is to follow the 50-30-20 rule, which divides your expenses according to needs, wherein you spend 50% of your money on necessities, 30% on wants, and the remaining 20% on savings.
However, in your 30s, the rule comes with some significant amendments to save more and spend less. This does not imply eliminating all personal expenses, but adjusting the ratios by raising the savings from 20% to about 30% can work.
3. Prepare for retirement
A secure future depends on retirement plans. If you achieve this financial objective in your 30s, you’ll be able to live comfortably into your senior years.
Unfortunately, the majority of Indians in their 30s lack a retirement plan. This is primarily because their current needs consume the majority of their income. There is an urgent need to reduce spending and put money into retirement plans.
Consider making long-term investments, such as allocating a portion of your savings to index funds and other secure investment avenues.
4.Monitor your credit score
Your ability to borrow money depends critically on your credit score. If your credit score is low, you might not be eligible for some financial plans or avail loans.
You can prevent getting sucked into an endless debt cycle by following these suggestions.
a) Any outstanding debts and bills must be settled right away.
b) Pay off all of your debts on time.
c) Refrain from falling for offers like easy EMIs or EMIs with no interest, etc.
d) Use an EMI calculator while applying for loans for accurate estimates of repayment
Maintain a credit score of at least 700. Although it may seem challenging at first, you will eventually see its advantages. You can prevent the snowball effect by managing your debt. This will not only help you achieve your future goals, but it will also improve your current financial situation.
5. Investing in insurance is wise
The only way to safeguard your future is not to just save. When making financial plans in your 30s, purchasing insurance is essential because it gives your family a safety net and can also be a smart retirement move.
If you don’t already have health insurance, get it right away. Get a medical insurance policy without further delay. This will guarantee the protection of both your wealth and health. Additionally, life insurance policies can help you save on taxes too.
Planning to buy a policy? Watch this video to know which ones to avoid!
We hope this gives you more direction as you embark on your financial planning journey.
See you next week!
Until then, stay Jagruk!
With
Team LLA