Axis Money IQ Knowledge Nugget - 185

Things to do before you turn 30

As you near your 30s, you have gained work experience and your earnings increase. Your 20s is the time when you want to begin your investment journey and even start planning for your retirement.?

Here’s a guide to help you work out short-term and long-term financial goals before turning 30:

Create an Emergency Fund

Create an emergency fund equal to 6 months of expenses for unexpected events. The money may be kept in a highly liquid asset such as a bank account or money market. Here, the priority is liquidity and not returns.

Explore asset classes and diversify

Regular contributions and diversification are the 2 ingredients for becoming financially independent. Starting early and regularly contributing towards your life goals and exploring various investment options for diversifying your portfolio is the key to success. You may consider various options such as investing in mutual funds catering to different asset classes such as Equity funds, Debt funds, and more.

Retirement Planning

Start with building a retirement fund. It may seem early, but since you have roughly 25 to 30 years to retirement, you can make the most of compounding by starting sooner. You may start with a SIP in a retirement fund. This way, you can ensure that contribution to SIP is done regularly, without any break.

Cater to your short, mid and long-term goals

Invest in a way that you can meet all of your financial goals, such as saving for a down payment for a new home, vacation, or higher study. Dedicate a SIP to each goal for a more organized approach to investing.

Do not cut back on investments for spending

Do not compromise on your investments to accommodate expenses. Keep a tab on your spending. You may note down your monthly spending and analyze where your income is being spent. Review your expenses, and cut down where possible to keep your savings and investment goals on track. Invest tax refunds, bonuses, and more towards your goals. Before taking a loan or buying on credit, understand its impact on your cash flows.

Financial discipline in your 30s can help you enjoy a financially stress-free life ahead.

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