The age of 30 is like a crossroads. You are no longer too young, and again, you are not old as well. What you do in this decade will influence how resilient your financial posture will be in the latter part of your life. Again, sometimes, it is only in the 30s that people start earning meaningfully. Perhaps they are planning to marry now, or they are just newly married. On the other hand, their parents are getting older. Therefore, people in their 30s remain in a very critical stage of their life. They must have a robust financial planning roadmap ready before them so that they can keep living their lives happily and peacefully.
Why Financial Planning in the 30 Matters
Once you pass the fiery 20s, it’s necessary that you start taking your financial well-being seriously. From your 30th birthday onward, you will realise that your responsibilities are increasing, and no matter how much you earn, it seems less. Things like starting a family, having a newborn, and ageing parents can multiply financial responsibilities.
Which Aspects Should You Include in Your Financial Planning Roadmap?
Once you reach your 30s, your financial planning roadmap should be crafted keeping your evolving needs in mind. Here are some of the major things that you must take into account:
Check Whether Your Would-Be Spouse’s Financial Goals Align With Those of Yours:
We don’t talk about financial compatibility when you talk about marriage. However, this is an extremely sensitive topic, and you must discuss this with your would-be spouse before marrying them. Once you get married, you will be saving money as a couple—not as an individual. Having good financial compatibility will make sure that your financial well-being isn’t jeopardised.
Quantify How Much Emergency Fund You Need and Keep It Available
Based on how many dependents you have, whether you are married or not—you need to quantify how much money you need to set aside as an emergency fund. A general thumb rule is to set aside at least six months of your essential expenses for building an emergency fund. Once quantified, keep the amount available—don’t use it to invest in illiquid assets. Remember, you shouldn’t aim for returns with this fund– liquidity and accessibility are the keys.
Invest In Insurance:
Insurance can help one prepare for life’s uncertainties and keep your financial plan on track. No matter how good a plan, it is incomplete if there is no insurance. Invest in a good health insurance plan to make sure your family is ready to face any medical emergency bravely. Medical inflation is rising, and hospitalisation expenses can drain your financial savings and put your financial goals off-track. Comprehensive health insurance is crucial for every family and individual out there.
Apart from a health policy, buy a pure-term plan for covering your life. This is a very important step if you have financial dependents. A term plan can help your financial dependents maintain the same living standards, pay liabilities, and meet planned financial goals in case of your unfortunate demise through the payout from the insurer.
Build Your Retirement Corpus, If You Haven’t Started Already:
Even when you reach the age of 30, you might feel like your retirement age is too far away. But trust us, time flies. Don’t be unprepared—because time won’t wait for you. Start building your retirement corpus when you still have time, and start early to benefit from the power of compounding. How you want to build it will depend on your objective. NPS, mutual funds, PPF, EPF, equity, etc, are some top choices to start your retirement planning. Talk to your SEBI-registered financial advisor to know what’s best for you.
Now that you are in your 30s, you need financial stability and predictability in your wealth growth. This can only happen when you invest in a disciplined manner and set realistic financial goals. Setting financial goals can help you stay committed and think long-term. It can also help you choose appropriate investment vehicles and take calculated risks.
Start Thinking About Your Tax Liability:
Taxes are a part and parcel of your financial life that needs to planned if you don’t want to pay too much of it. Every strategy in your financial plan should have a plan on taxes– more specifically, how to pay less of it.
Should you invest in NPS to claim deductions? Should you opt for the new regime or stick with the old regime to reduce your tax liability? You should craft a tax plan at the beginning of a financial year to avoid making all these decisions at the last minute that can hurt your finances further.
In the end…
The third decade of your life is the decade of taking responsibility. But don’t let the responsibilities make your life miserable. Follow the financial planning best practices, and you will be gracefully navigating this third decade—and the subsequent ones as well.
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