Did you enter your 30’s this year or have you already started the journey? The ’30s is the time where most have crossed a couple of milestones in their life, have reached somewhere in their career—and are growing. It is also the time where you get your finances in order if they are already not. Most people in their 20’s do not keep a track of their money, but in your 30’s you need to tidy up financially.
It is the time when most start preparing for the responsibility of children or planning to buy a house, and so on, for which a well-laid plan is needed to see what your finances will look like in the future. Hence, it is the right time to start budgeting and take some serious financial decisions.
If you are not there yet, here are some must-dos and don’ts for financial planning in your 30s:
Debt: Be it through overspending or using multiple credit cards, avoid getting into debt traps. If you have multiple credit cards, find out if you really need them? Most people get into debt because of multiple credit cards, each one used at their peak limits with revolving credits. These are like multiple loans at the same time charging the highest interest. Hence, avoid this at all costs.
Stocks might not be your best option: Starting with an investment early can make a lot of difference. In your 30’s, experts suggest equities are the best way to take off. However, it doesn’t mean you should buy stocks directly. Even though earning from investing through stocks gets the adrenaline pumping and high, it needs extensive research and knowledge. Most investors keen on earning more give in and invest in stock markets and end up losing all their money. Investing in the stock market is risky and the probability of losses is also high.
Investing early with SIP: Start by investing through SIP inequities. SIPs will help you create enough wealth over a period of time. For instance, if you put Rs 5,000 a month for 30 years, you will get around Rs 1.8 crore at the end of the tenure by just putting Rs 18 lakh. Try to gradually increase your SIPs proportionately in line with a rise in your income levels over the years.
Retirement planning: With your investments in equities through SIPs of mutual funds, consider the retirement planning into your larger scheme of things. Also, try to invest in some of the pension schemes, and look for the ones currently on offer.
Be well insured: Most at this age buy insurance for tax efficiencies, but have you bought insurance that provides you with the right cover? Find out if you are insured enough for mortality cover and health needs. Getting the right insurance cover will help you in case of any eventualities especially when you expect it the least.
Party budget: Entertainment and socializing are necessary, and it is almost a weekly thing at this age. Hence, having a monthly budget for these things will make you stick to it, as people spend a lot of their monthly entertainment. Not having a budget will pinch you severely in the form of credit card bills, especially when you are trying to get your finances in order.