When you move to your 30s you experience a lot of changes in your personal life and career. Your friends will get married and move away for better career opportunities. You too will move higher in your employment shouldering more responsibilities. Your earnings will see a healthy growth allowing you to enhance your lifestyle. Initially you spend a lot of time in the office even during weekends and earning for those extra hours, but as you get married things start to change. Since you are not alone anymore, you start spending time with your family which means giving those extra hour earnings a miss. Your priorities will change where it’s no more about you but your family. You need to address now not only your aspirations but also protect dreams and financial future of your family. If you are not able to accommodate so much change in your financial life, then mistakes can happen. That’s where the need of financial planning arises.
If you have been following a financial plan it will be easier to review and make changes. But if not, then you will have to seriously consider creating a roadmap for you as any financial issues now will jeopardize security of financial future of all those who are dependent on you.
Here is what you should plan essentially when you are in your 30s and moving along with your family for a bright future –
You will have more concerns now. The lifestyle you are creating will decide how you build your future. On other hand any contingencies/emergencies at this stage can drag you few years behind. Sometimes when you are not planned, you may even find it difficult meeting your both ends. So you need to identify any such possibilities of future and create an adequate emergency fund which can sail you smoothly in such situations. The fund you create should take into consideration all your basic household expenses and liabilities. Whether you keep a 4 months or 12 months expenses is a decision which you can take based on your support from the friends and relatives.
2. Good Savings
When in 30s, your expenses tend to increase as you add more members in family and add liabilities. Although your income too increases, but the increase in expenses is much higher since it will also include the cost of child upbringing i.e. education, where inflation is much high. This income and expense mismatch results in reducing your savings ability. So you need to monitor your outgo so that you can continue generating a decent savings from your income. Ideally, a 20-25% ratio is a very good surplus to generate but anything below 10% should ring a red alarm for you. If it’s not happening, you need to accommodate few changes to ensure savings can be generated. Once you are on the track you then need to invest these savings with the right asset allocation to ensure you can reach your goals.
3. If Two Income
Many couples in this age group are working and so your family lifestyle may build on two salaries. Your house rent, expenses, child school etc. are decided based on the two income situation. But this may change in future as some situations may not allow one of you to continue working. For e.g. Your spouse may have to leave her job for the child care. In such instances all the expenses will have to be met by income of the husband only. If your lifestyle is build on two income then you need to keep your expenses in manageable limit so that you don’t have to cut down your savings later. You should analyze today what If scenarios so that you are prepared for such a situation. One of the good ways for doing this is to manage expenses from one salary and keep the second as savings.
4. Buy Insurance
This is the most critical aspect since you will be growing not only in your career but also in your personal life. In 30s you get to experience the amazing experience of parenting. The joy cannot be described in words. But there are also many concerns when your child is growing up. The child education, marriage, etc. are at the forefront. You may also starts some liabilities at this stage as you opt for mortgage like a housing loan or a car loan. Thus, in your 30s you will have to shoulder many responsibilities and liabilities. If not protected well they can impact your loved ones financially. So you need to identify and buy adequate insurance- life, health and disability to deal with any emergencies which may arise in future.
5. No Job Hopping
During initial years of your career you have the liberty to switch jobs may times to get a rise in your income or career. But as you move in your 30s job hopping may not be an ideal approach. There are host of issues involved if you do not have stability in your earnings and career. Liabilities, recurring expenses, emergencies etc. need to be factored in before you can take such decisions. You might face problems in availing loans if you have too much frequent job changes. Any gap in your earnings also brings financial issues where you may have to dip in your emergency funds. So taking a career change at this stage should be a thoughtful decisions taking along your family concerns with you.
6. Prioritize Your Goals
When you reach this stage there are many goals which gets added up. Frequent vacations with family, buying a house, car, and most important child upbringing. You may be planning to become an entrepreneur. Unless you are aware on all your goals, you will not be able to utilize your resources efficiently. So It’s time that you prioritize your goals now so that you know what is your next to be achieved and how you can prepare with the right course of action.
A change in life stages brings a lot of change in your financials. You need to be prepared well to accommodate these changes. A Financial Planning approach helps in doing so if you have already carved out your life roadmap. If not, this may be the right time to create one and move ahead with your family.
How you cope with situation of life changes? Do you plan ahead?
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