The Buyt Desk
Financial planning is important and sticking to it is more critical. Making financial blunders in your 30s will put you off track from achieving financial goals.
The first step is to have a financial goal as per your needs. And then have a financial plan to reach your goal. Keep updating and revising the plan as the events of economic change. Do consider the inflation while setting goals. You need to understand the importance of investing and the magic of compounding. Sticking to the plan and not deviating is most important to achieving the financial goal and so is avoiding committing a few mistakes. Financial mistakes made in the 30s will be blunders as they will impact the plan. To have a happy, relaxed and peaceful retirement, avoid making these financial blunders in your 30s.
Avoid These Financial Mistakes-
Saving and not investing – Youngsters consider saving as investment, which is a mistake. Just saving your money in a bank account will not earn you anything beyond 4-5% annually. This is less than the current inflation rate. Over years money loses its value when not invested. To increase the value of your money it is necessary to invest it in the market and growth should beat inflation.
Not having a PPF Account – Public Provident Fund (PPF) account is a good option to invest in as it has a fixed and high rate of interest with less risk. PPF has tax-saving benefits. Its interest rates range between 7 and 8% which is much higher compared to bank fixed deposits. The amount of investment made in the PPF account, the interest earned and the maturity amount are tax-free. The tax benefit is one of the most important rewards of investing in PPF but it is capped to Rs 1.5 lakh annual contribution. One can open a PPF account either in a post office or any bank. The maturity time of PPF is 15 years and you can keep extending it by 5 years.
Not starting SIPs – Systematic investment plans (SIPs) help you visualize your investment multiplying in a short duration. This is an investment you should start very early in life as soon as you start earning. SIPs are best when you are able to stick to regular investments. Significant savings can be achieved through SIP which otherwise would be difficult. SIP makes you invest your money for a long period of time and this helps to grow your money. With SIP only financially disciplined people can make it big. You should not be emotional when it comes to investments. You can choose small-cap funds, large-cap funds, mid-cap funds, debt funds or money market funds to start SIP. Based on your risk appetite and the time you have, you can keep building your portfolio with different funds.
Not having Health Insurance – As the costs of health and medical expenses are getting costlier, health insurance is a must for all. Health insurance will provide you with financial support in case of a medical ailment or medical emergency. Hospital expenses will drain you both financially and emotionally. Having medical insurance early and when young have a lot of benefits. Health insurance premiums are cheaper when you start young. Having health insurance will be the best financial decision you can make in your 30s. Always have your individual health insurance despite the employer-provided medical coverage as that will be insufficient.
Not having Term Insurance – After your death, all your liabilities will be taken care of by the term insurance you have brought. It pays the sum assured to your nominee only after your demise. To have a large amount of sum insured at a lower premium you should buy term insurance very young. Premiums of all insurances go very high as the age of the insured increases for the same amount of sum insured. Hence the later you purchase term insurance, the higher premium you have to pay.
Making impulsive investments – Youngsters just invest for the heck of it or just because some friend is investing or because parents are asking to. This is a very wrong way of investment. Investments should be based on your financial goals and planning. Take professional help when in doubt. Financial advisors will help you make good financial decisions and save you a lot of money.
