Becoming financially stable does not happen overnight. Some people go through the lifetime paying debts and paying just the monthly bills.
Listed below are the some of the tips to handle the money at an early age. 30 years of age is half way to the retirement age and it is the very important to become frugal with the money by adapting the steps for money management.
- Budget planning
First step to any financial management is budget planning. Without understanding the income, saving and spending we would not be able to manage the hard earned money.
Plan a doable budget plan, track it down on paper, spreadsheet or online app and ensure to stick to the budget planning. It requires a few months of practice to get on track but it is worth the try.
By understanding the spending habits, we will know where to cut down the expenses and how to reach a financial goal.
- Start saving
Starting to save means stop spending the whole paycheck. Start dividing the salary to different categories and the first one in list should be towards saving.
Start saving smaller amount and gradually increase the amount. By setting up a goal and budget planning you will definitely save some amount to be moved to savings account.
- Financial goal
Set up a real financial goal. Think of where you want to reach after 5 years financially. Envision by which year what should be achieved. Write down the plan and start saving towards the plan slowly and consistently.
Do research work on mortgage, down payments, financing etc thoroughly. Calculate the amount to be saved to achieve the goal.
- Understanding debt
Understanding debt is very important. Try never to fall prey to debt. Many of us by the age of 30 years would have a debt because of our overspending especially credit card debts or vehicle loan. Repaying debt has become a part of financial planning, which could be even considered as normal!
First step to get out of the debt is evaluating how much debt we have at this point and then create a budget plan to avoid anymore debts.
Make a list of all the debts. Then plan to move a part of money to clear the current debt. Then try paying more towards the smallest debts and clear them as soon as possible. Again by slowly and consistently we will be able to clear the debts. At this point make sure not to have anymore debts.
Try paying the debts as soon as possible so that we don’t end up paying more interest than the actual reason we took the money for.
- Emergency fund
Remember, our savings is not for emergency. If you don’t have an emergency fund plan set up, you will end up taking out from the saving fund that was primarily saved to achieve your goal. Save a part of your earning to emergency fund. It is always better to have three months’ salary as emergency fund.
- Retirement plan
30 years is half way to retirement. If you wish to live happily after retirement, start saving towards the retirement plan benefits. The earlier you start more interest you can enjoy at retirement.