While in your twenties you might not have thought about your future, as soon as you enter your 30s, you start realizing the ground realities. This is the time when we start thinking more about our future rather than the cool parties in the town.
Though it is a good idea to make a sustainable financial plan for life as early as possible, not many people, give it much thought in their 20s. If you have just entered your 30s and you have no control on your financial situation, the good news is, you still have time. Now is the time to start planning to ensure that you have a comfortable 40s and 50s and so on. I just bought a term plan and realized that I should share this post with you all.
Here are ten smart money moves that you need to make it your 30s.
1. Make a budget
And most importantly stick to it. 30s is the good time to make a monthly budget if you have not done it before. There are many apps that you can download on your smartphone to easily make a monthly budget, which includes your income and your expenses. In the beginning it may feel a bit difficult but with a little practice, discipline and a lot of self control, you will be able to master this amazing financial planning technique.
2. Grow your emergency fund
You may not want to think about it, but as you reach 30s, you will have to start maintaining an emergency fund. There are a lot of uncertainties in future. As you start aging, you require more health checkups as well. Therefore, it is important that you have an emergency fund that is sufficient to meet any urgent situation. At my end, I have become a little bit of frugal nowadays.
3. Cut back your expenses
As you cross your 30, the carefree days of 20s become thing of the past. Now, I do not mean to say that you have to overburden yourself with worry, stress and anxiety about future. Instead, to live a life free of anxiety, you need to start thinking now. While instant gratification and indulgence was passable in your 20s, it is now time to think about your financial security. When I started my expenditure plan, a pair of new shoes every month felt like a necessity. However, as I started to discipline myself, I found that I could easily have done without all those pair of shoes that I don’t even wear after a few uses.
4. Think about your retirement
Yes, you have thirty plus years of retirement. But to plan for it, you have to start now. By now, you must have a retirement fund. If you do not have, this should be your first agenda for now. If your company is giving you a matching contribution in a retirement saving like NPS plan, then opt for it now. It will be imprudent to not take the advantage of this benefit. Start growing your fund, so that you can have a comfortable future after retirement. My NPS account right now has some Rs 4.12 lacs, and it looks like a big saving now.
5. Tackle the risk
This is the right time to have a look at your life insurance and disability protection. Review your current cover and ensure that it is enough to protect you and your family in case of your unfortunate demise or sudden disability. Always go for a term plan. I am not endorsing anyone but there are some very cheap and comprehensive plans out there. You can compare them at policybazaar.com
6. Review your credit report
30s is a good time to start taking your credit reports more seriously. Get your report at least once in every 2 quarters, to know where your credit score stands. If you have a high credit score, you will have more potential lines of credit. I always believe that we need a certain amount of ‘good & manageable credit’ in our life.
7. Clear your debt
Debt is one of the most chronic problems faced by many. If you are in debt, make systematic plans to get rid of them as soon as possible. The more debt you have, the more money is stuck in paying those hefty interest rates and the lesser you have for your savings. If you are not sure how to manage your debt, it is the right time to consult an adviser.
8. Take good debt
This may seem contradictory but it is not. A good debt is which adds value to the asset in the long term. The bad debt is the one which provides you instant gratification but have no value whatsoever in longer term. If you need to buy a home, it is a good idea to for a home mortgage, as at the end, you will own a house which adds to your assets. On the other hand, purchasing shoes on credit card does not make any sense.
9. Start investing
If you have no idea what a mutual fund, stock or bond is, it is time to brush up your financial knowledge. Talk to your investment adviser and let him or her know about your risk tolerance and investment goals. The adviser will come up with a long term investment plan to grow your wealth. You can invest in bitcoins, domains too, if you’re open to learn different investing options.
10. Invest in your skills
Take certification courses that add to your skills and expertise. This will ensure that you have an edge in your workplace. It will also ensure that you get higher paying job. Udemy.com is one such service, where you can find plenty of free courses as well.