Top 10 Important Financial Moves to Make Before Hitting 30

We all want to grow rich. We work round the clock, push our limits to work over-time, and shift jobs which offer a good pay. But no matter how much the earnings, the retail inflation, and the lifestyle inflation, coupled with an overall high cost of living burn a deep hole in the pocket. So, one has to be wise when it comes to managing his finances. This will help him have a much more secure future against unforeseen circumstances. Thus, we bring to you the top 10 financial moves that you should follow before you turn 30, to reap the benefits in the later years.

Financial Planning: Top 10 Financial Moves to Improve your Finances

Become Financially Independent of Your Parent’s Earnings

The first step to reach where you want to be is to leave the comfort of what you already have. Becoming independent of your parent’s earnings will enable you to find a good job, network with people, grow as a professional and lay the foundation of a continuous inflow of money in your own account. Once this is established, the further steps can be followed as to how to grow that inflow of money along with saving it.

Be Frugal in Your Spending

Once money has started flowing, two things happen – Expenditure and Savings. People mistakenly expend as much money as possible and think of the remaining money as savings. WRONG! Learn this formula: Expenditure = Income – Savings. First, save a fixed amount every month and then what remains is available for your monthly expenses. You will learn and manage your finances better this way. Remember, money saved is money earned.

Create an Extra Income

Once you have found your feet firm in a stable job, then it is time to create a plan to generate an extra income. Even if it is small, the extra cash will do wonders to reducing the heavy load on your main income, especially if you are in a debt.

Read more:4 Keys to Managing Personal Finances Successfully

Control Your Debts

No one likes to be in a debt. If the borrowings are for an exceptionally long time, then the overall interest paid may surpass the principal amount borrowed. Huge financial burdens restrict your future plans of retiring with a good amount of money with hardly any savings left. Hence, try to minimize the borrowings as much as possible.

Invest

Now that you have understood the importance of saving money, you may wonder that it is lying stagnant, which erodes its value. Hence, now is the time to invest by investing in Mutual Funds, PPFs, and Stocks. Diversify your portfolio to minimize the risks. Investments also help you save your taxes!

Be Frugal in Your Lending

You have saved and invested a great deal of money. People such as friends and relatives may come to know and ask for your monetary help. Helping is a kind deed. But it becomes tricky when closed ones are involved. Hence, going all out and emptying your account for someone’s sake will do you more harm than good. Lend money only to an extent that even if the borrower has defaulted, it will not have an adverse effect on your financials.

Keep Aside an Emergency Fund

You never know when the next recession or the layoff cycle is! You may get sick and unable to continue a job for a long time. Hence, the money from salary may stop abruptly due to such unpredictable circumstances. What if you also have a debt to pay? In such cases, it is crucial to have a contingency plan. This can be done by having at least 3-6 months funds separate. This can be utilized to pay monthly expenses, bills, EMIs.

Insure

Insurance does wonders when it comes to tragic incidents. There are several insurances such as Life Insurance, Car Insurance, and Home Insurance. So, one can analyze which is the most important or vulnerable asset possessed and can accordingly purchase an insurance to cover the same. However, it should be noted that insurance is not an investment scheme.

Read more; Money Management Tips for Low-Income Earners in Cities

Plan for Children’s Education & Marriage

Unlike the Western countries where public schools are top class, India has below standard govt. schools. This means enrolling your kids in expensive private schools. Nowadays, most kids also pursue post-graduation, which is one of the most expensive courses. After that, there is marriage which is an ostentatious event in India. If you have two kids or more than double the overall costs! Hence, planning for your kids grooming throughout is of most vital importance.

Create a Retirement Plan

There would come a day when you would have to retire and be all by yourself to take care of you and your wife. So, if you have a sufficient pool of money with you by that time, imagine how grateful you shall be to your younger self for saving! Hence, creating a retirement plan has to be on your list of financial moves to make before hitting 30!