Common Mistakes to be Avoided in 30’s

This article is the next in our series of avoiding common mistakes for a person in a different era of their life, We are going to have a look at financial mistakes to avoid in the 30’s of a person. Needless to say, the 30’s is the most powerful and impactful decade of a person’s life. You can ask me why. We have plenty of reasons to call it Power Decade. It is the time when a person is financially stable, having a regular source of income, is planning or already has a family, has few more responsibilities, and of course, is financially viable to plan and fund all future financial needs.

The good thing about one’s financial situation is – It gets better when actions are taken and mistakes are avoided and the best thing is – It’s never too late to start. So, let’s get started with how and what to avoid doing in your Power Decade. There are many such, but let’s keep it limited to an important few.

• Not Having Clear Financial Goals: First of all, let me applause you if you have already identified your financial goals and have started working on them. If not, start identifying them. Not setting goals is the biggest mistake one can make in their 30’s. Goal setting shows the financial direction to your journey, like, where to go, what to achieve, what comes next, how to surpass the next challenge. Start having a clear vision of goals as It’s never too late.
• Spending beyond means: This is the time when you meet new people probably for work purposes or business expansion. You may find your peers having fancy attires, luxury cars, lavish homes, and so on. It’s not wrong to want to have them but one must keep these expenses within their means and budget. Lifestyle Inflation can eat up a significant portion of savings. Be aware of your own behavioral biases.
• Saving but not Investing: Many people around us want their savings to merely stick around Savings account, Fixed Deposits, and Real Estate. This, we can say, is the costliest mistake you can do. There is something called inflation. These little returns seldom overcome the inflation effect. Very conservative investments like these are suitable for short-term goals. In long term, equities can outsmart their fixed return counterparts
• Delaying Investments:A person rightly pointed out, Procrastination is the grave in which Opportunity is buried. The earlier you start saving and investing, the greater you have a chance of meeting goals efficiently. The Power of compounding, as we describe it as the 8th Wonder, works best on your corpus when you give more time to let it grow.
• Not maintaining adequate Emergency Fund: It is money set aside that can be used to fund unexpected emergencies of life that may require immediate action. An ideal emergency fund must have enough cash to last for 6 months. An inadequate emergency fund can push you into debt at times of sudden financial distress and this debt can add fuel to the flames of the current financial crisis.
• Not having adequate insurance cover: Not having a sufficient insurance cover can prove to be disastrous in the event of undesired situations. For example, your family might have to go through a great financial hardship if something undesired has happened to you. Insurance is an effective way of transferring risk to safeguard your family financially. Moreover, insurance taken at earlier stages of life may cost you less than taking it later. A sufficient Pure Term Plan and Health Insurance Plan can serve the purpose.
• Getting back to Education: It is not uncommon for you to upgrade your skills to get better pay or promotion at workplace. For this, you may need to take up a course or a professional degree. At this time, you also need to consider the financial impact of entering into education. A cost-benefit analysis must be done and you must have clarity if you need to take up the course.
• Not planning effectively for Retirement: In India, most parents concentrate more on children’s education and marriage goals more than their own retirement goals. Moreover, the retirement goal is the costliest and more important goal that cannot be funded with help of loans. Long-term care, medical expenses may drastically increase at the age of retirement, which is to be addressed and funded as early as possible.

How to secure your financial freedom in 30’s:

• Make investments in line with Tax Benefits: Taxation is an important aspect to be taken care of in this segment of life as there are high chances of salary increments and perquisites. For this purpose, one can make use of investments under section 80C, 80D. ELSS can be effectively made use of to achieve the target.
• Avoiding Revolving Credit: Credit cards are one its kind services offered by financial institutions. When used effectively, debt is always proven to be a good thing. Better usage and effective management of credit cards can help improve financial well-being and at the same time offer you incentives like cibil scores. Credit cards are a great cheap source of funds and at the same time, ineffective usage can create a mountain of debt.
• Diversifying investments for various goals: Different goals may have different time frames. Single options don’t suit all the needs. Investments for long-term goals can bear with volatility in equity markets, whereas short-term goals are to be in safe vehicles, Emergency funds are to be maintained in liquid funds or savings accounts. In this way, there will always be different routes to a destination and each one is worth considering. In short, Diversify your investments.

Conclusion :

From a financial standpoint, your 30’s are the most critical decade of your life. Use time wisely, stay strong, learn from the mistakes, plan efficiently, avoid unnecessary expenses, invest in yourself, love your family, and most importantly, LIVE LIFE SINCE “WE ONLY LIVE ONCE”.

We at Nivesh Ki Paathshala, are always happy to help with your any queries or doubt. We would be happy to help you or guide you