Any person should learn some financial lessons before he/she reaches the age of 30. This financially will be very useful to that person and will stick with them throughout their life. Some of the important lessons that should be mastered by them are as follows:-
1] Create a Strong Emergency Fund –
An emergency fund is important to the health of your finances. If you do not have an emergency fund, then you are going to be more likely to use savings or rely on credit cards to help you pay for unexpected expenses. You should set aside 3-6 months of your monthly expenses (including any EMIs you might have) in a separate emergency fund. At the end, how much you are able to save will depend on your financial situation. Make sure you do not withdraw or use from this fund unless it’s for emergencies.
2] Define Your Financial Goals –
Sit down and think about your financial goals. Write them out and figure out how to make them a reality. You are less likely to achieve any goal if you do not write it down and create a concrete plan. Your goals can be a reality within a year or two if you take the right planning and saving steps. And it is true for all financial goals, such as paying off your debt or saving enough money for a down payment.
3] Stick to Your Budget –
Very few individuals actually stick to a budget. Once you turn 30, it’s time to start allocating where every rupee you earn goes.
On the whole, budgeting is to know where your money goes in order to make sound decisions. It’s fine to spend money on shopping or fun trips, as long as these fit into your budget and don’t reduce from your saving goals. Knowing your spending habits will help you find out where you can cut expenses and how you can save more money.
4] Start Building Your Retirement Fund –
Most people either enter their 30s without having money contributed to their retirement, or they are making the minimum contributions. Make sure that you are benefiting from your company’s matching contribution. Many companies will match your contributions up to a certain percentage. As long as you stay with your company long enough to become vested, this is basically free money for your retirement, and the earlier you start, the more you’ll earn in interest.
Sadly, most people are not prepared enough for retirement. Either they miscalculate the amount of money they require at the time of retirement or start saving when it’s too late. Don’t make the mistake of not having enough money and having to rely on your kids for your expenses. Start planning for your retirement before you hit 30 (the earlier the better).
5] Save at least 30% of your Income –
The wealthiest individuals in the world did not get where they are today by spending their entire income each month. In fact, many self-made millionaires spend their income modestly. Start by spending only 70% of your income and save the other 30%. Having that money automatically deducted from your paycheck and put in a retirement savings account ensures you will not miss it. Gradually increase the amount you save while decreasing the amount you spend.
6] Figure out Your Debt Situation –
Assess how much debt you have outside of your loan and create a budget that helps you avoid gaining any more debt. There are many ways to pay off debt. Paying off your debts will have a significant impact on your finances. You will have more breathing room in your budget, and you will have more money freed up for savings and financial goals.