Maintaining your financial health is like following a regulated diet to maintain your health. Both require a great amount of effort, continuous reviewing and loads of patience. A decision made in hurry for any of these can have a long-term impact on the health of both. So, it is important to take right decisions for the well-being of your finances at all stages to secure a relaxed and stress-free future. So, if you are approaching your 30s and plan to settle down soon, but don’t know how to keep your financial health on track, here are five handy tips to follow:
Don’t Ignore Budgeting
We all know that good budgeting helps plan our finances better, but remain oblivious to this crucial personal finance aspect. Based on your income, craft a budget that segregates your important expenses from the trivial ones. Allocate part of your income for savings and investment that will help you in accomplishing financial goals and lead a healthy and prosperous financial life. If you are nearing 30s chances of you planning to get married or already married or perhaps having a family with kids are high. Either ways a good budgeting process is a must. Plan your bills in advance, keep ample backup for unexpected expenses and never give in for impulsive spending. While budgeting, do factor in fixed expenses like home and auto loans.
Do Away With Recurring Expenses You Don’t Need
While all of us enjoy the luxuries of life, we unknowingly tend to underestimate the impact of a few unnecessary expenses on our financial health. Paying for channels that you are not watching, streaming services that you hardly watch, club memberships and mobile plans are some of the expenses that you should review immediately. These are recurring expenses that should be controlled. Even a small amount of Rs. 500 you pay for streaming service can give you returns at 12-15% if invested for a monthly SIP for 10-15 years. So, list out such expenses by reviewing your bank statements and credit card bills, and cut them for more meaningful expenses. This will also help you stay within your budget.
Prepare Yourself For Rainy Days
In our youth, we hardly visualize anything bad happening to us. But in these uncertain times, it is wise to be prepared for any eventualities. A sudden job loss or a medical emergency can knock your door anytime. An emergency fund has the potential to bail you out from an unannounced financial crisis like this. So, once you start earning, work on an emergency fund by saving money in recurring deposits as liquidation during an emergency would be easier. But don’t touch this saving to splurge on unnecessary things.
Keep Insurance Coverage A Priority
Insurance is a protection that comes to your aid in times of eventualities like death and disease. A term insurance is essential for a salaried individual as it provides an assured amount to the nominee if the insured person dies during the tenure of the policy. Buying a policy at an early stage comes with cheaper premium. Rising healthcare cost has made health insurance as you can ensure quality healthcare along with affordability.
Use Credits Judiciously
If used responsibly, credit cards are great financial instruments to tide away shortage of funds. They let you buy now and pay later. But you should use a credit card only after assessing your repayment capacity to avoid falling into a debt trap. You should use a credit card for necessities and not luxuries. Also, while using a credit card ensure that you pay before the deadline to avoid paying high interest and maintain a healthy credit score. Credit cards are also rewarding so use them in a manner that you extract the best out of the reward points. You can redeem your accumulated points for rewards in cash or kind.
While following all these points, do give attention to retirement planning to secure a regular flow of income in your golden years. Since you will eventually rely on investments made during your youth, ensure you save well and put your money to work for your retirement.