In this article, we will be discussing the Ten Money Lessons that one should know or learn to apply in their 30s. So Let’s start!
1) Controlling Expenditure:
- Generally during the late 20s or early 30s, the expenses of an individual increase on account of several reasons due to marriage, kids, loans of homes, or other personal reasons.
- To control expenditure or to actively follow investment strategy despite increased expenditure then one should follow the basic thumb rule of 50:30:20 where 50% of the income should fulfill the expenditure needs, 30% of the income should go for long-term investment goals, and 20% of the income can be allocated for short-term goals or wants.
- Here, one should try his/her level best to invest a minimum of 30% of the income should go for the investment avenues.
2) Control Lifestyle Inflation:
- In India, the Consumer Price Index (CPI) Inflation generally hovers between 6% to 7%.
- Here aside from this general inflation in the economy, an individual has his/her particular lifestyle inflation as well which is much higher than CPI inflation.
- What is Lifestyle Inflation? The answer to that is quite simple it means earlier if a person is purchasing shoes of around Rs. 1,500, now with an increased standard of living or lifestyle, he/she will now buy shoes of more value for instance Rs. 2,500.
- Here, one should check his/her lifestyle inflation as it can severely impact the budget of an individual and financial goals as well.
3) New Dependencies:
- After the age of 30, there is a significant change in an individual’s life on account of marriage, new income source, or new dependencies like wife/husband/children, there is a great change in financial planning as well. In this scenario, one should review his/her financial budget and plans as well.
4) Emergency Funds become even more important:
- For any individual and at any age, an emergency fund is one of the most important things which one should have. But during the 30s, the importance of having emergency funds become even more important.
- As a basic thumb rule, one should have 12 months of Expenses including EMIs as his/her Emergency Fund. One can park this amount in a savings account, Flexi-Fixed Deposit Account, or any other liquid option.
5) Having Health & Life Insurance:
- Similar to the importance of having an Emergency Fund, the importance of having health and life insurance also become more important on account of increased dependencies.
- With the increase in the age of an individual, the health of an individual also deteriorates, for that same reason having health as well as life insurance becomes important to avoid any worst circumstances.
6) Planning Retirement:
During one’s 30s, the retirement goals become clearer as a person gets more clear vision regarding his job, and other visions related to life. Hence, one can act accordingly and make his/her retirement plan.
7) Asset Allocation becomes important:
- During the 30s an individual has a fixed income source and thereby one should opt for an asset allocation strategy and have an investment in the different avenues as per the asset allocation.
8) You are Never too late to Invest:
- If any individual has not started investing even during his/her 30s then he/she should not feel that they are late to enter the investing world. One should know that it’s never too late to invest.
9) Thinking of Starting a Business?
- Currently, there is a trend of starting a start-up or a business among individuals who are in their 30s. Then, in this case, one should first focus on his/her core goals that whether their retirement and children’s education, and other related goals are being taken care of, and then only one should think of starting a business or a start-up.
- If the core goals of a person are not being managed properly, then one should first take care of his/her core goals and then should focus on starting a business.
10) Hire a Financial Advisor:
- In the case of low or no expertise in the investing journey, a person should opt for hiring a financial advisor for a better investment journey with minimum tension.
- Generally, a person should look for a fee-based financial advisor and not a commission-based financial advisor.
What Should an Individual Do?
The above discussed are some of the key lessons one should learn or understand during their 30s for achieving financial freedom, wealth creation, or other financial goals.