If you spent your 20s discovering yourself, enjoying your life, or just finding your feet personally or professionally, then hopefully by your 30s, you would be ready to start laying the financial foundation for the rest of your life. This is actually the perfect time to start saving and investing your hard-earned money, whether you are a salaried individual or self-employed. Now may also be the time you have additional responsibilities, whether it is your spouse and children or elderly parents and in-laws. This may also be the time when you have greater responsibilities in your career. You may also have opportunities to earn more than you did in your 20s, so it would be wise to make the best out of this time of your life.
Here are some simple strategies you can implement to secure your finances starting right now:
Create an emergency fund: Ideally, you should have enough savings to last you at least 6 months in the event of not having any income coming in at all (in the case of losing a job or a recession). Make sure that the money you put aside for your emergency fund increases in proportion to your rising expenses.
To make it easier to put aside money, you could start investing in Systematic Investment Plans (SIPs). This will make sure that your savings also earn interest which is then either added to your capital or reinvested in the stock market to get further gains. Or you could just open a good old-fashioned recurring deposit with your bank which will also earn you a reasonable return on investment. Opening a post office savings scheme where you have to invest monthly is also a good idea to kickstart your emergency fund.
Health insurance: Healthcare expenditure is only rising by the minute, along with lifestyle diseases that the previous generations never had to battle with. Even if you and your dependents are covered under your employer’s health insurance policy, the sum insured may or may not be enough to cover all your hospitalisation expenses, in the event that you or your loved ones need a surgery or other treatments.
So, it is best to take a health insurance cover individually or a family floater policy for you and your family. This will prevent you from having to dip into your savings for any life-saving medical treatments or surgeries.
Life insurance: It is imperative to ensure that your family is provided for even in your absence, which is even more important in case you are the primary breadwinner. So, make sure that you get a really good life insurance policy that will enable your family to continue maintaining their standard of living, educational expenses, EMIs, future expenses, etc., in case of anything untoward happening to you. Choose the policy you take carefully because you will have to commit to it for a long time and it will be the savior for your family.
Investments: Good old–fashioned savings is one thing, but a little bit of investments in stocks is also good. No matter what your risk appetite is, investments in mutual funds or directly in the stock market can help you attain your goals faster, if done carefully and with the advice of the experts.
Whether your goal is to buy your own house or finish off your home loan by the time you are 50, or travel the world and retire early by 45, or give your children the best education in India or abroad, or arrange a destination wedding for your child, the 30s is the best time to start investing so that your money bears fruit by the time you need it.
Retirement funds: You should never depend on your children as your retirement fund, if you can help it. Now is the time to start saving and investing so that you can be truly independent and free during your golden years. While your Public Provident Fund or Employees’ Provident Fund are good enough sources of money for you in your old age, you can also diversify your investments by putting your money into the National Pension Scheme, post office savings schemes, SIPs, and other investment and savings instruments.
This way you can rest assured that you will be free of any financial stress in your old age. Whether you choose to potter around leisurely in your garden in your sunset years or jet-set around the world with your spouse, or spend time cruising around the oceans, you will know that you have all the money you need for your dreams to come true without depending on anyone else during your retirement years.
Clear your debts: Whether your debts are outstanding credit card bills or personal loan EMIs, vehicle loans or home loans, education loans or consumer loans, it is best to finish paying off all your loans by the time you are 50 at least.
This might mean making small sacrifices along the way, such as making a part-payment on your loans with your annual bonus instead of taking off to Bali for a holiday. You not only save money on the interest when you pre-pay your loans, you also reduce your loan tenure and increase your monthly disposable income when you do so.
Use your 30s wisely and your older self will thank you every day for the rest of your life!