We often see people making lists of things to do by the time they are 30 or before they reach 40. These lists usually have items like travelling to exotic destinations; having a child; learn a new language etc. These are good goals to have of course, but what I see missing in these lists are goals related to financial security. So we made a list of financial goals to make when you are in your 30s.
10 Goals for your 30s
Take Adequate Insurance:
Are you insured properly? You must take a term policy so that your near and dear ones are financially secure and comfortable in case of any unexpected events. If you have a housing loan, do ensure that it is covered by home insurance so that in case of default, there is some backup.
Take steps to ensure dependents are taken care of:
Are family members dependent on you? If you have aged parents, you should take a medical cover for them. If you have children, you should take into account the expenses that would be incurred on them like their education. You should invest in various options like PPF, FDs/RDs and mutual funds and keep this amount separately.
Are your savings lying only in bank accounts and bonds. You should invest in a variety of assets so as to get better returns and diversify risk.You should invest in equity as well. Typically allocation in equity should be 100-(your age) in percentage terms. So if you are 30 years old, 70% (100-30) of your investment should be in equity and equity based assets. As you grow older, reduce equity investments, as they are considered more risky/volatile compared to other assets.
Invest in yourself:
If you are in a job, take courses to upgrade your skills to enhance your career. Learn new things related to your industry and job so that you don’t find yourself obsolete in the job market. If you are a professional or have a business, attend conferences and seminars for networking and latest news in your subject matter. Invest capital to expand your business. You should also learn new things so that you have a well-rounded personality.
When you started off your career or business, you may have just invested in tax saving instruments so as to avoid paying tax. Change that. Invest in proper tax planning instruments so that it helps you in reaching your financial goals and provides financial security. Plan your income and taxes from the beginning of the financial year rather than putting money in some ‘tax saving’ instruments advertised heavily in February and March or because your friendly neighbor, the finance advisor has to reach his sales target.
Buy a house:
Investing in real estate is not easy. You need to consider various things like price, location, reputation of builder, appreciation value etc. But if your job is such that you will not be in a new city or country every year and you have a family or plan to have a family, you can think of buying a house. It will help in tax saving. Post retirement, you will have a place to stay and rents increase with inflation and renting out in the long run will be expensive.
Estate is the total networth of a person. You have to plan your estate be it big or small. It means taking steps such that your wealth is taken care of and distributed to recipients, as you want after your death without legal problems. Some steps here are creating a will, nominating guardians for dependents and monitoring estate plan regularly.
You should have started planning your retirement in your 20s. If you have not done it, follow the adage – ‘Better late than never’. You have to check how much you need after you retire. It should be equal to an amount that can maintain your lifestyle factoring inflation and take care of medical expenses.
Bring in self-discipline:
You might have splurged on a lot of things and experiences in your 20s as you were young and having cash in your hand was a new found freedom for you. But now you need to discipline yourself. People around you might be buying fancy gadgets, latest fashion gear and holidaying abroad every year. Do not get distracted by this. You have to plan for your and your family’s future and your retirement. You have save regularly and ensure you are on track to reach your financial goals.
This has to be done from when you were much younger. But it is never too late to start a good habit. Draw up a budget, categorize your expenses and set targets for each category. Make sure that you don’t exceed the targets. If one expense goes above the limit, take steps in other areas to curtail overall expenses. There are many software applications like Perfios & Android/Apple Apps that will help you manage your budget.
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