The youthful 20s are the time when most of life’s big events take place – completing education, starting a job, getting married. However, it is the mature 30s that really define our personal and career graphs for the rest of our lives. It is the age to settle, consolidate and start building a prosperous future. No more a carefree individual, the 30s man/woman has clear business and financial goals to set and fulfil.
Until then, one is free to live for themselves, without a care in the world. Now it’s time to save, invest and watch our expenses with the welfare of spouse and kids being our prime focus.
So for all those who are in their 30s, we at Shanthala Chits wanted to put together a list of simple but important tips to maintain good financial health and create foundations for the future. Read on …
Time to start saving. Expenses should not exceed 70% of income
It’s probably the first time in our adult lives that we start thinking of the concept of ‘saving’ ! All the years before, whether it is daddy’s money we are spending or our own, there’s never been the need to save or invest. But now, it’s time to put aside money for specific life goals for the near & long term.
Curtailing expenses to fall within 70% of income can only be done if there is a clear budget in place. Work out the various income sources, clearly define expenses and create margins for savings & investments.
A large part of the monthly expenses in this age are planned expenses as health emergencies are not much likely. School fees, home loan EMI, support to parents, are non-negotiable expenses. The rest of the discretionary expenses can be carefully worked out and pruned to match income levels.
However, some provisions for emergency expenses must also be accounted into our plans. So that unplanned expenses don’t eat into our carefully saved surplus funds.
Build a diverse investment profile for your surplus funds
The 30s are an age when one can afford to be a little adventurous and take moderate risks with their investment profiles.
It is recommended to keep at least 50% of the surplus in safe, fixed instruments such as FDs, property or gold. That way, there is a guaranteed return for the near & long term, especially useful for major milestones such as kids education or buying a house.
As a typical, young and middle aged urban investor, you belong to the class of customers who are willing to experiment with the markets to trade in various instruments – such as equities, mutual funds, commodities, options, bullion and other forms of speculative trade.
However, there is a huge element of risk involved in this route. While the returns may be good when the economy is booming, the principal invested is not guaranteed at all. There have been instances when crores of public wealth has been eroded in a single day of bearish market trends.
Chit funds, on the other hand, make a good low risk, moderate returns instrument. With the added advantage of high liquidity, they can be withdrawn at very short notice and the money can be put to use almost immediately without any major procedural formalities.
Keep a close watch on your borrowing
There is a tendency to borrow beyond ones means among the youth, especially in the 20s. A new iPhone, a fancy bike or a backpacking trip to Europe – nothing seems impossible. But as you step into your 30s, it’s time to control these impulsive buys.
Just because there is easy credit available to a salaried person, it’s not a good idea to borrow indiscriminately. Though it looks like easy money, loans or debt are a major financial burden and can completely wreck your financial security. Payment defaults come with exorbitantly high penalties and spoil your credit worthiness.
Consider starting a chit scheme
For the 30s age group, chit funds are a very suitable financial instrument. That’s because chit funds can clearly be earmarked for each of our financial goals. Let’s take an example. Start a chit scheme of Rs 25K per month, and by the end of the 2 year tenure, you have enough money to purchase the car of your choice for your growing family.
When you open a new chit scheme for a lump sum amount with a fixed 2 or 3 year tenure, you start paying monthly instalments along with all the peers in the same chit group. At any time during the tenure, you can choose to bid for the lump sum and withdraw the entire money with zero debt liability. The later you withdraw, the better your returns would be. But in case of emergency, you have an immediate source of funding right at your fingertips.
Out of all the above options for short term financing, we can see that chit funds are very attractive and viable. The only factor that weighs upon the minds of an investor in the fear of scams and financial fraud. When an investor picks a registered chit fund house, all the government regulations and safeguards come into effect as defined in the Chit Fund Act, 1982. So your investment is as safe in a registered chit fund as in any other financial institution.
Shantala Chits has been in the business of chit funds for over 2 decades now. We are a Government approved chit fund company with a 24-year successful track record and thousands of satisfied customers. Shanthala Chits is registered under the Chit Fund Act of 1982, Government of Karnataka. We are one of the most popular chit fund houses based out of Bengaluru, known for our customer satisfaction and secure investments.
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