Most of us know that it is never too late to start saving but time can slip between your fingers. If you are turning 30 this year, gift yourself with a financial plan, if you are debuting in this field. Starting early gives you the advantage of enjoying higher returns due to long investment tenure. However, you might lose your edge over certain financial products once you cross a certain limit. Young people especially in their early-mid 30s are caught up with their daily life. They think they have the finances to fund all their requirements and that a bank loan is just a mouse click away. But, all these laid back routes can crumble once you start a family and your needs and wants expand.
Listed out, are a few things that you should keep in mind when planning your financial requirements;
List out your debt:
Credit card:
Extending your credit period on your credit card is a problem rather than a thick bill. Having such a huge amount will force you to buy a loan at exorbitant rates of interest which can go up to 39% per annum. Also, it is not always possible to anticipate for a loan if you are in a great financial mess since the financial institutions can reject your loan application if they forecast that your credit standing is in jeopardy. Ensure that you clear off all the dues on your credit card amount and not carry it forward to the next month. Doing so will protect you from inflated charges like an extra 3-3.25% interest rate burden.
Loans:
Most people are in the false belief that, personal loans are the only solutions to all their immediate financial requirements. But, it is important to note that personal loans carry quite a high interest rate. Avoid having more than one debt on your account as it can make a lot of difference to your overall take home pay. The only solution is to stop taking any further loans and chase towards paying back the entire amount. Ignore the prepayment penalty that you may be charged with. It is definitely going to be much lesser than your interest amount on the loan for a cumulative period of 6 months.
Home loan is another debt that many people carry on their accounts. But they are not very harmful as compared to other loans. One thing that you need to keep in mind is that try not to opt for a home loan amount which consumes a major portion of your income. Since assets appreciate in value, they generally do not create a more cause of concern. However, since it is an illiquid asset, parking most of your funds may not give you the required amount of money immediately in case of emergencies.
Secure your future
Insurance policies:
Acquiring life insurance policies at a younger age will enable you buy protection for your life at much lower prices since the mortality charges are lower. Simplifying the same is- you as a policy holder will be able to get a high sum assured by paying a low premium. In order to factor in the amount, you need to consider the following factors- your age, the number of dependents, lifestyle requirements etc.
Health insurance is one of the most important requirements for an individual amidst the soaring medical bills put in front by hospitals. If your company is providing you with a health cover, it is important for you to have one of your own. Make sure that you have a health insurance policy that will help cover your health bills and reimburse your health expenditures before and after the incident.
Diversify your portfolio:
After bringing down your debt to a 0 level, and making way for insurance policies, start off with a simplified procedure. Invest some funds into RDs and slowly increase your risk appetite by moving onto SIPs especially in equities. Later, you can include debt into your portfolio that way paving way for diversification.