FINANCIAL MANAGEMENT MISTAKES TO AVOID IN YOUR 30’S
There are many financial management mistakes, which should be avoided in your 30’s. Our reader could call back the article on financial planning mistakes to avoid in your 20’s.
This article is a continuation. So, kindly go through the first part, which will lay a basement for a better understanding of financial management mistakes to avoid.
The age group between “30-39” is termed as the 30’s. This age is almost halfway completed in your career and end of the adult group.
The majority of you under this age group will have a family with 2 kids. Most couples will be employed, few depend upon a single income.
The point here to convey is if you avoid the mistakes, financial freedom shines over you.
Here are some glimpses of a major mistake done by people of 30’s
· Lack of financial security for your family.
· High Debt Burden.
· Maximum purchase through Credit card.
· Starting Business for High-Interest Loans.
· Being trapped in non-productive policies.
· Zero Knowledge of Investment.
· Lack of awareness of retirement planning.
LACK OF FINANCIAL SECURITY FOR YOUR FAMILY:
The major mistake done by the 30’s is keeping their family unsecured in life. Life is unpredictable. Within a day a family collapses completely and becomes bankrupt.
The major reason is improper awareness and planning. The major security which a family needs are
· Term Insurance(Minimum Coverage of 1 Crore)
· Health Insurance (Minimum Coverage of 20 Lakhs per Year)
· Emergency Fund(6-12 months of total income)
This security protects the family from loss of family head or job loss to some extent in financial struggles.
HIGH DEBT BURDEN:
In recent decades, it’s hard to see people without debt. There are many ways you can be a part of the debt trap.
Even the most intelligent people are been trapped by home loans. It has a huge interest impact.
People don’t care about the interest rate, EMI, tenure, and option of interest rate (variable/Fixed). They need the loan at the time and regret after paying 10 years and finds only 30% of the principal is settled.
Debt always eats your wealth, and you won’t find a way to come out of debt until you do proper financial planning.
You should be clear that debt should be avoided at any cost. You should achieve anything in life by making goals and aligning your investments towards them.
MAXIMUM PURCHASES THROUGH CREDIT CARD:
In our recent article, we have discussed how credit cards will make prey to the debt load.
A maximum of credit cardholders increases their purchase than their mean of life. A credit card makes a fancy glass over your eyes and attracts all you see.
This makes you a spendaholic, improper financial management, and leads to high paying debts.
Try to cut down all your purchase using a credit card. We advise you to close the credit cards.
Do shopping with hard cash. So, whenever you pay out with cash, it makes you bleed at heart.
So, you will avoid spending which is more than your mean.
STARTING BUSINESS FOR HIGH-INTEREST LOANS:
This one of the biggest mistakes most people in their 30’s to do. You might be or people around you might be a real-time victim.
The biggest reason is, people get motivated by their skills and discussed with few friends take some part of loans by all. Then start a business with debt as an initial investment.
Few people succeed, but most fall prey to this strategy of starting a business.
Never take these kinds of risks. Instead, you can invest and grow your money.
If you still have a passion for business, read this article on how to start a business.
Start a business as a side hustle. Develop your business in free times and weekends. Try to attract investors.
BEING TRAPPED TO NON-PRODUCTIVE POLICIES:
There are many policies emerging in the last 50 years in this world, in which people involve themselves with their relatives or friends.
They might be
1. Endowment, Cash Back Policies.
2. Fake Retirement, Child Education policies.
3. Join today, become billionaire tomorrow’s business schemes.
These are major impacts that people don’t understand. These policies will eventually spoil your financial stability.
These are major mistakes is to avoid the financial management journey. To avoid these mistakes,
· You should read the complete terms and conditions.
· You should calculate the return (interest rate)
· These policies are the long term of 20 years. So, if the returns are less than 8% per annum, avoid them.
ZERO KNOWLEDGE OF INVESTMENTS:
People fail to take risks and regret after a long time, as their traditional investments are mainly focused.
The knowledge of investment is largely laid on FD, RD, and LIC policies.
When you don’t find a way to beat inflation, the earned or saved money won’t bear any fruit.
It is always a false theory keeping money in the bank or in hand for long period without any growth.
Like equity or fixed income instruments, gold and real estate don’t have a fundamental to analyze the value.
Also, their return in long term is less than 8% per annum and these instruments too fall and have volatility.
So, to have greater financial management, have proper knowledge of investments.
LACK OF KNOWLEDGE TOWARDS RETIREMENT PLANNING:
The biggest problem with this age group people is don’t have retirement planning.
They completely depend on their children’s post-retirement. It is a blender mistake. You should always have better retirement planning, also should calculate the corpus needed for your retirement life.
This should be based on current expenditures on NEEDS.
You should be completely responsible for your retirement life. Start saving a part of your income while you earn, and invest with proper knowledge.
These 7 golden guidelines will make your financial management a safe zone.
If you are in the category of people, who are committing these mistakes. Kindly get out of this danger zone.
This age group is more crucial in your and your generation’s life, so plan carefully.
HAPPY PLANNING AND INVESTING!!!