When in your 30s. this often means hitting milestones in your life that come with a hefty price tag; getting married, buying a home, having children, saving for your children’s education and many other competing demands for your money. So How to SAVE and INVEST?
Faced with mounting expenses, it is no wonder that the 30-somethings of today feel burdened with complicated financial needs and challenges. Not only must they pay for today’s necessities; they must also think about the future and their retirement plans.
Being successful financially is not just about how much you earn – it is knowing what to do with your money. How much you save and invest will definitely have a huge impact on your future lifestyle. All you need to do is to remember to the four-lettered word S-A-V-E, to ensure your golden years are truly golden!
SAVING FOR YOUR RETIREMENT IS MORE IMPORTANT THAT YOU THINK.
The rule of thumb should be to “live below your means.” Saving should come first and foremost: put aside what you need for retirement and spend whatever is left over. What people typically do is the opposite; spending first then saving what is left over. Important lesson to learn here: pay for your future first and it will ensure your present is secure.
Sort out your priorities, then allocate your monthly income/assets to each. The recommended allocation (for reference only)
- 50% for essentials
- 15% for retirement investments
- 5% for short-term savings
- 30% for discretionary spending and additional saving
Also, be careful not to accumulate more debts/liabilities than you have income or assets to pay for.
ASSESS YOUR FINANCIAL PLANS CONSTANTLY
With marriage, home and children comes a whole new set of responsibilities. With these new responsibilities come new personal finance goals, and you will need to meet them by revising your current financial plans.
To make sure you are always prepared, it helps to revisit how much you have accumulated in your “rainy day funds” or emergency savings account. What might have sufficed when you were single, might be insufficient now that you have other commitments like paying for a house and raising a family.
VERIFY YOUR COMFORT ZONE
People in their 30s are often advised to take a more aggressive approach to investing so they can stay ahead of inflation and grow their nest egg. But do bear in mind that your investments should be carefully calibrated to your comfort level.
When creating your investment portfolio, bear in mind your goals; be it short-term goals such as buying a home or long-term goals like retirement.
ENJOY THE ART OF INVESTING
If you have never invested while in your 20s, your 30s will be a good time to start.
Prefers a hands-on approach to investing? Go ahead and build your portfolio, but bear in mind to carefully research your picks, monitor them and re-evaluate your portfolio from time to time.
For the “play-safe” type of investors, consider target-date or target-allocation mutual funds which are great options if you want to dip your toe in the water without having to dedicate a lot of time or effort.
The financial decisions you make in your 30s will determine whether or not you can retire the way you wish to. Better now than never – you can start today!
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