Whether it’s your retirement, marriage or child’s birth, financial planning is necessary at every stage of life. The moment you begin earning, you need to inculcate the habit of financial planning to make the sure achievement of each and every life goal. Once you reach your 30s, your financial responsibilities raise and financial planning becomes a lot more crucial. But, pure savings won’t suffice, you’d need certainly to allocate your savings for particular life goals.
Below are a few financial tips for those in their 30s, which may assist in setting their finances on track.
1. Plan and Invest for your child – The responsibility of a child generally comes in your 30s. From the beginning of your child to his/her higher education and marriage, every stage needs a good amount of corpus. With climbing expenses of higher education and living expenses, taking an education loan would seem imminent.
However, this might burden your child from the beginning of his/her career and rarely leave any room for own savings and investments. If you start investing right from the time your child is born, you have around 18 years to accumulate the corpus for your child’s education. Therefore, it would be recommended to invest in equity mutual funds, since these have consistently beaten the inflation costs and provided higher returns, which are adequate to build a corpus for your child. Ensure you choose direct mutual funds as they deliver higher returns than regular plans.
2. Maintain an emergency fund- Emergency fund hedges you and assists in helps financial exigencies such as for instance job loss or serious illness.
Essentially, your emergency fund should amount to at least 3-6 times your monthly expenses. Even if you have been building an emergency fund, make sure you don’t use it for any other purpose except emergencies. Moreover, as your age increases, your expenses also rise due to family expansion and increased responsibilities. Therefore, your emergency fund must also proportionately increase with your rising expenses.
3. Ensure purchase of an adequate insurance cover- Assure purchase of a sufficient insurance cover- An adequate health Insurance and term insurance assures that you along with your family are adequately covered.
in case of medical emergencies or your untimely demise. When you achieve your 30s, make sure you have a pure term insurance plan, whose cover should amount to at least 15 times your annual income.
4. Start investing for your retirement- Most individuals commit this mistake of delaying their retirement plans to a later stage, thinking they still have at least 25-30 years of employment. This leads to inadequate retirement corpus being created, which isn’t sufficient to match your living and medical expenses as per your life expectancy.
5. Use credit cards to build a credit history- If you haven’t used credit cards yet, you must start using them in your 30s. Credit cards can help you build a good credit history which would ultimately fetch you a high credit score.No one knows when you might need to avail a loan in future due to any reason. Maybe you would require a loan to buy a car, your dream house or for any unexpected event in life. To avail a cheaper loan and better service terms, you must build a favorable credit history by using credit cards.