Becoming financially smart at a young age reduces the burden of managing personal finances later in life. Most people expect to retire by the age of 60-65 years. Reaching the age of 30 years marks the halfway point to your retirement. If your expectations are to have a financially stable life post retirement, it is necessary that you set and achieve certain financial goals by the time you are in your 30s. These financial management tips will help you prepare for your retirement and give you an idea of where you stand in terms of managing your personal finances.
1. Set up an Effective Financial Plan
Financial plans are necessary for every age. However, by 30 you must start taking it seriously and spend less time thinking and more on creating a concrete financial plan. It is necessary to understand your goals and what you want to achieve. Note down your dreams and aims that you want to achieve alongside the age and time you have for the goal. Financial management at an early age is not only beneficial but effective too.
Let us say you want to purchase a house at the age of 40 years. You must start planning for your dream from the time you are about to hit 30 years. Start by researching real estate prices and take into account the change in price over the years and other such factors. If necessary, consult a vehicle financer and get an estimate of how much you need to save.
Start setting an amount aside every month for your dream home at the beginning of the month. This way you save a little every month while inching towards your goal. Planning ahead will enable you manage your finances in a way that will help you prepare for the expense.
2. Diversify your Savings
Never put all your eggs in one basket. Having a diverse finance portfolio not only helps in minimising the market risk, but it also helps in increasing your return on investment. Start by opening a savings bank account, which is the safest and easiest way to earn interest. Although small, it is the first step towards building a savings portfolio. Among all the financial management tips you will get, savings is the most important and something everyone should take heed of irrespective of their age.
3. Pay your Debts
Paying your debts at the earliest will enable you to spend on other things that you may desire. One of the best money management tips any financial advisor will give is to pay your debts as timely and responsibly as possible.
Start by paying off the smaller debts and give yourself time to repay larger debts like a mortgage. Some of the long term loans might also have financial benefits in the form of tax write offs. Make sure you contribute towards paying your debts as much as possible.
4. Take Insurance
Insurance is an effective instrument to support you financially in an hour of need or in an emergency cash crunch. It also inculcates the habit of saving from an early age and ensures financial assurance for your future. Investing in life insurance and a health plan is necessary for any salaried personnel and medical insurances have a significantly lesser premium when you are in your 30s.
5. Build an Emergency Fund
This is not only for the ones reaching 30 years of age but also for everyone who has an income source. Create an emergency fund you can fall back on in the case of a crisis. Setting aside a portion of your earnings every month will help build a strong fund which can be later used as you may like.
6. Plan for Retirement
This might not sound exciting especially if you are still in your late 20s. However, this is a finance management tip that will secure your future if you dedicate some time now to plan your finances effectively. In your 30s you still have a lot of time to plan your retirement effectively without straining your budget.
It is never too early to start paying attention to your finances and implementing steps that will help you secure your future. The earlier you start, the greater are your prospects of ensuring financial stability in your post-retirement years. In your 30s, you are halfway to retirement and have ample time and freedom to set long-term financial goals. So, use these tips to achieve your personal finance goals and build a strong financial portfolio.
