The human life cycle is divided into various stages, starting from taking education, getting a job, getting married, planning your children’s education and their marriage to finally taking retirement. All life stages have their own relevance, but the most important one comes around the age of 30. It is the transformation age where some of you get married, some of you get dependents and so on. It is the crucial stage where one needs to think and re-think about how to meet one’s future financial goals.
Here are some of the things which must be taken care of while planning for the future:
Develop a savings habit
Most importantly, one must develop the habit of doing proper savings every month. The best way to save money each month is to save first and then spend money as per your needs and wants. The habit of saving early helps you in maintaining a calculative household budget which in turn helps in understanding your insurance requirement need. Do not take too much of insurance cover without concerning your financial adviser.
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Think about retirement
This is the stage when you have sufficient time period of approximately 20 to 25 years to do proper savings for your retirement. Also, one becomes stable in one’s job and starts earning a decent amount of money where one can save for one’s future needs. For an example, if you are 30 and you have saved approximately Rs 1 lakh in your bank account, then in such a case, you only need to diversify your investment in different instruments where you can earn more returns. Therefore, by doing the same you can make approximately up to Rs 24 lakh by reaching the age of 50, if the rate of return is 16%.
Repayment of debts
One of the major concerns is accumulating unwanted debt and then keep paying that off on a regular basis. The most common cause of the accumulation of debt is the hefty usage of credit cards. It is so easy to buy an unaffordable good by using a credit card, but paying off your debt is not easy. So, if you are into that situation then pay your debt wisely because once you degrade your CIBIL score, you may not be able to take any loan further, like when you would like to buy a new home in late 30’s.
Emergency fund
The best way to save for an emergency fund is to have a separate bank account where you can pool in a small percent of your income every month. Various studies show that one should ideally maintain at least 3 to 6 months of expenses in advance to meet the need during an unfortunate crisis, if that occurs in the future. However, there is nothing to worry if you save more than that as you do not know how much money you will need during the cash crunch phase.
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Insurance cover
Once you get dependents, securing your family should be the priority for you. Taking a cover to secure your family at this stage is very cost effective where you need to pay less premium for a longer term. Insurance not only secures the future of your family but also helps in securing your long-term financial goals. It is always suggestible to take term insurance because at a low cost it gives you the maximum cover.