Reaching the age of 30 is an important milestone in one’s life as many of us go through various changes or have already experienced a lot of life’s ups and downs by this age. In most people’s lives, 30s bring some form of financial stability, maturity to deal with life’s challenges, personal stability, etc.
Every individual has certain life goals which he/she would like to achieve at various life stages. One can achieve goals if there is sufficient planning that is done well in advance, especially when it comes to financial goals. Before reaching 30s, one should start thinking from a long-term perspective, set goals, and design a path to achieve these goals. To achieve these goals, one must start early.
A head start to investing and focused saving before turning 30 can reap huge financial gains in the long run. Here are top 5 tips for handling your money before turning 30 such that you can achieve your long-term financial goals comfortably.
5 things to do with your money before turning 30
Start saving early
If you aim for a financially secure and comfortable future, you must begin saving before you reach your 30s. The earlier you start saving, the better the chances of achieving capital growth over time. Take, for example, equity mutual fund investments. Even if you put aside a small amount in these every month through SIP, there are higher chances of fetching positive returns in the long run. It is advisable to start saving at least 5% of your income to achieve a goal of 15-20% growth by the time you reach 30. You can begin investing a small amount through Systematic Investment Plan (SIP) and diversifying your portfolio by using various investment options like debt, equity, fixed-income, etc.
Aim to be debt free
30s bring more responsibilities in terms of family, children’s education, healthcare needs, etc. It is also a time period when you can start freeing yourself from various debt obligations. Whether it is personal loan, student loan, home loan, etc., all open debt should be repaid on priority with the objective to clear as many obligations as possible by the 30s. Since loans often carry high-interest rates, these are best avoided later on in life. One can still consider opting for a home loan after 30s since the underlying asset, i.e. home, can appreciate over time.
Purchase a health insurance policy
The Covid-19 pandemic has highlighted the need for health insurance as medical costs proved unaffordable for many across the country. Individuals who did not have health cover and were faced with medical expenses for Covid-19 recovery could easily have been out of savings, especially in hospitalisation cases. Hence, having health insurance is crucial for living a stress-free life. While many employers provide their employees with a corporate health cover, solely relying on these may not be enough. Such covers are available only until the time one is employed with the organisation. Hence, one should buy a personal health insurance policy for self and dependent family members.
One of the main benefits of getting health insurance cover before turning 30 is that the premium cost will be far lower as compared to availing it later on in life. Also, one can claim the premium paid towards insurance as a tax deduction under Section 80D.
Stay on track with budgeting
To save and pay debt on time, it is important to use a budget. Note down your earnings and make a list of monthly expenses against it. This will act as a starting point to set a budget for the near future. You may also want to set aside some money for paying monthly bills apart from savings and debt obligations. Without setting a budget, it can be challenging to save and pay consistently.
Always aim to understand your financial goals and spend accordingly. Keep a track of your spending. You may be able to enjoy your 40s and 50s by inculcating a habit of savings before your 30s. A monthly budget will act as your guide to saving money and achieving long-term goals.
Create an emergency fund
Financial planning is mostly incomplete without a provision for an emergency fund. Setting up an emergency fund can be done via saving or investing a minimum of 6-12 months’ worth of basic expenses. The purpose of an emergency fund is to take care of any unforeseen emergencies, such as medical needs that are not covered under health insurance, unexpected job loss or other unexpected expenditure. While investing for an emergency fund, the investment should ideally be made in low-risk instruments that offer stable returns and higher liquidity.
By using these 5 tips on money management before turning 30, you can be well-prepared to deal with financial needs at various future stages in life. Starting early is the key, along with consistency in maintaining financial discipline.
- Is 30 too old to start investing?
Different life goals require planning at different life stages. It is ideal to start financial planning before attaining 30 years. If you are 30 and haven’t yet started investing, this could be the right time to begin allocating funds to savings, investments, and clearing of debt. This will enable you to be in a better financial state as you reach a later stage in life.
- How much should a 35-year-old have saved?
A 35-year-old should ideally have saved at least two times his/her annual income. This will enable the individual to be financially safeguarded against instances like job loss, medical emergency, etc by the time he/she attains 35 years.
- Can I keep SIP for 30 years?
An SIP helps investors adopt a financial discipline along with a habit of saving. It makes sense to start an SIP as earlier as possible in life. If you keep an SIP for 30 years by starting it around the age range of 20-30s, you can build a substantial corpus by the time you attain retirement.
- Which mutual fund is best for 30 years?
Long-term mutual funds such as equity funds, hybrid funds, etc are ideal for an investment time period of 30 years.
- How to invest in mutual funds?
To experience a seamless mutual fund investment process, you can download the Fisdom app on your smartphone. The app provides access to various top performing mutual fund categories and allows investors to select funds based on investment time horizon, risk-return appetite, and other factors.