I think in your 30s it’s really important to have financial stability of long term.
When you’re being challenged to do more at work and you have family commitments and big aspirations and big goals buying a house, starting a business that you’re working towards, then financial planning becomes more relevant.
The first step is to know where your money is going. And a monthly budget can help you keep track of income, essential expenses, lifestyle spending and savings.
Rather than saving what remains at the end of the month, setting aside a fixed amount soon after receiving your income can make saving more consistent.
Emergency fund must also be part of the equation. Ideally, one would be able to put enough money in an account to cover several months of essentials and other things that might need to be done before and can be made available in a short financial time before they need it.
Wealth planning is, really, debt management as well. High-interest debt can take a big bite out of saving and investing. Debt reduction and regular savings can be used to fund future goals.
And your 30s are also a good time to invest in the long term. You may look at diversified options mutual funds, stocks, bonds or retirement-oriented investments depending on your financial situation, risk tolerance and goals. It’s not only to try to get high returns but to construct a diverse portfolio that matches your time horizon.
Retirement planning should not be delayed. Early on in your investment the time to make money and profit from compounding will be more valuable. And even small contributions will pay off over the course of a few decades if you make them consistently.
Insurance is also a critical component of the whole financial plan. Health insurance can shield savings from big medical costs and appropriate life insurance can cover dependents.
What is truly the right coverage is customized to each individual and financial situation.
It is of course equally important to set financial goals. Rather than having a general goal to “save more”, aim for things like building an emergency fund, down payment on a home or education, retirement corpus or starting a business.
Each goal has a timeline and an estimated amount to have the plan be done and are in place to move the plan to reality.
And lastly, your financial plan should be reviewed regularly. In your 30s, your income, expenses, investments and responsibilities can change a lot. You may review your budget and investments regularly to ensure that your plan still serves your purpose.
Using the wealth you have and planning for the future that you’re in your 30s is what you do and that’s where you start.
And for long term financial security in your 30s you’re going to need saving and sensible investing, debt management and good protection and goals.
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