Emergency Fund To Retirement Corpus: 7 Smart Money Moves To Make In Your 30s
As responsibilities may increase as you enter your 30s, it’s advisable to re-evaluate your investment goals and allocate funds appropriately for various purposes.
Your 30s are a crucial decade for building a strong financial foundation. It's the time when your career gains momentum, expenses start to rise and major life goals like buying a property, starting a family, or planning for retirement also keep you occupied.
It is essential to make smart money moves in your 30s for a secure financial future. Here are 7 money moves you must make in your 30s, covering crucial aspects like emergency fund, insurance coverage and retirement savings.
1. Build An Emergency Fund
You never know when an emergency will arise, as life becomes more unpredictable when you are in your 30s. So, it is essential to build an emergency fund to cover unexpected expenses. Try to save an amount at least enough to cover 3 to 6 months of your regular spending. An emergency fund will help you prevent taking high-interest loans during urgent situations.
2. Get Life Insurance Plan
Getting a life insurance plan is a way to protect your family financially. In case of any unexpected event, a life insurance plan could provide the much-needed financial security to your family. It is always recommended to take a life insurance plan with coverage of at least 10 to 15 times your annual income.
3. Create Extra Income
With the rising cost of living, it is important not to depend on just one job. Try using your existing skills to work as a freelancer or invest in a side business. This can help create extra income and give you financial freedom and stability.
4. Start Investing
If you start investing early in your career, you will have enough money to become financially independent and you can even consider an early retirement. You can invest in mutual funds, fixed deposits, public provident funds and stocks. It’s also important to reevaluate your portfolio and adjust allocations to different assets, as per your financial goals. Starting investment early in your career helps to build a sizable corpus even with a modest amount every month due to the power of compounding. You will have an investment horizon of at least 15-20 years to build a sizable fund if you start investing in your early 30s.
5. Create A Budget
It is essential to create a monthly budget and track your spending to manage expenses smartly. This will not only help you stay in control of your finances but will also prevent you from overspending. This way you can save extra money for your future.
6. Avoid Extra Spending
When people start earning more, they often tend to start spending more too, sometimes on things they don't even need. Instead of overspending, you should focus on saving first and then spending later wisely.
7. Create A Retirement Plan
Cost of living increases with time, and the prices for basic needs such as milk, rent, electricity or medical bills also rise. So, to beat inflation, it is necessary to create a retirement plan, as it will help you prepare for rising costs.
To conclude, there is no one-size-fits-all solution when it comes to financial planning in your 30s. You should evaluate your income, monthly budget and financial needs before choosing investment instruments.
