There is never a perfect age to manage money. One must follow a process to make better use of money. There is enough time, in your 20s, to experiment and understand. In your 30s, however, there is an added responsibility when it comes to managing money. An effective understanding on savings and investments can lead to better prospects for the future. So, if you are entering your 30s, here are some sure-shot ways which can help you optimise your money.

Build an emergency fund

This should be a priority. Life is full of unexpected occurrences — good and bad. While no one wishes for emergency, practically keeping this in mind and making life’s decisions accordingly helps a lot. It’s crucial to, therefore, build an emergency fund. The general rule is that it’s important to have three to nine months’ worth of living expenses tucked away. You may, of course, need more or less depending on the situations. Keep this in mind that, by 30, you should be at least at the nine-month savings mark.

Work hard and negotiate your salary

While salary raise and benefits take time, you cannot sit around and expect a raise and bonus to come to you without hard work. If you feel you are efficient enough and contributing more than others to the organisation, it’s ok to ask for a raise. It’s also a smart move to negotiate your salary thereafter. You will have to ask for what you want.

Contribute at least 10% of your income for retirement

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One factor one must never neglect is that of retirement. Yes, time is on your side when you’re young, but making use of this time is what counts the most. The 20s are a crucial decade to set your goals right and decide about the future. This paves the path into your 30s where you must actually act upon all your goals and missions. Thinking about life after retirement is the first step to get it right. Experts believe and recommend that keeping aside at least 10% of your income serves the purpose to a great extent.

Make sure to get in the habit of increasing your contribution on a consistent basis, especially as you get a raise along the way. It’s crucial to have this on your agenda before turning 30.

Establish savings goals and set aside money for big purchases

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The shift from 20 to 30 is drastic on many levels. The huge expenses and most important decisions define this decade. These expenses comprise a home, family, vehicles, vacation, to name a few. Now, the effective way to prepare yourself for these expenses is to create savings goals. Adjust your budget, make plans and contribute timely to savings accounts. This should, of course, depend on your upcoming purchases and time horizon. Treat this money like a fixed cost. This means you must set it aside like you would do for rent and utilities.

One tip for this is to set up automatic transfers from your checking account to your savings accounts.

Establish wealth goals

In addition to savings goals, this age also requires establishing standards for your annual income and net worth. We all have to work constantly to earn money and a certain standard of living. Formulating a financial plan is the first task in hand to be able to define wealth goals. Be realistic while setting a time frame to achieve these bigger wealth goals. Think big and challenge yourself through the process. This is a form of self-learning too.

Insurance needs

It’s important to start thinking of insurance if you haven’t already. With rising medical costs, you must consider getting a medical insurance to cover your medical costs. Make sure to follow it up by other insurance policies. The earlier you get these, the lesser the premium amount and complications you will have to face. It’s also necessary to re-evaluate your insurance plans each year. This helps in ensuring that your plan is still working for your needs and budget.

Track your expenses

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You should, by 30, have a very clear idea of the money that is coming in and the money that is going out. Make sure, without fail, that you’re earning more than you’re spending. This will serve as a reminder to track your savings and retirement goals, too. Make changes and shifts in lifestyle if required and get in the habit of saving up.

Make strategies to track cash flow and record your purchase. There are a plethora of applications these days to help you do that.

Pay off debt

Make a record of your credit score and focus on paying off your debts and loans consequently. Stop carrying large credit card debt for a longer period as this will only dampen the situation. Clear the debts timely. If you aren’t sure where to start, consider taking advice from family and financial experts. 

Diversify and Invest

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Diversification is a crucial phenomena. When it comes to managing risk to maximise your return, it pays to diversify. Diversify among cash, stocks and bonds. Also, don’t make the common mistake of putting most of your money in safe investments like savings accounts, deposits and money market funds. Diversification reduces unnecessary risk by spreading your money among a variety of investments. Also, take advantage of tax-deferred investments. If we talk about a will, it is another way to ensure that your funds, property and personal effects will be distributed according to your wishes.

Automatic payments

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In this technologically savvy world, you cannot make an excuse to ever miss a payment. Majority of bills can be paid online and you often have the option of setting up automatic payments. If you automate consistent payments for fixed costs, you won’t have to worry about them every month.

Automating your finances can help save you time and money. It’s conveniently easier to save if you automate a transfer to your savings account every time you get a pay cheque. It’s also easy to keep a track of all of your bills if they are automatically deducted from your bank account.

Learn from failures and mistakes

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There is no perfection to handling money. Making mistakes while managing money is normal, so don’t beat yourself up about it if you go over budget or forget to pay a bill on time. What matters is getting back on the wagon after a financial mistake and working to prevent the same mistakes in future. It’s also a needful phenomena to identify past choices that have led to financial frustration or stress, and learn from those. Use failure and goof-ups as a learning tool for future decision-making.

Also Read: Under 25? Here’s How You Can Plan Your Finances

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