Get married, starting a Family, Building a Career, 30’s
This is the stage when your income is rising as well as expenses. You are adding new commitments like owning a home and responsibility to raising your family. You might start to feel the financial stress as your income increases might not able to cope with the commitment changes in your life.
Dealing with all these financial obligation can easily stress you out and distract you from other key areas of your finances. And this is the time when optimizing your money become crucial and your financial choice along this stage will have huge impact on your financial future. What’s important is finding the right balance, so you don’t miss opportunities to set you and your family up for a bright future.
Here’s what deserves your attention financially:
1. Stay within Means. Review your Budget.
- Now you have more commitment and yet you have to start saving for your future. Reviewing your budget enable you to understand how your income flow thru your account and find ways to save.
2. Increase your Emergency Fund.
- As your expenses and commitment grow, you should also increase your emergency fund. 3-6 months of total expenses would be a reasonable amount to look at.
- This portion of money has to be kept in save and liquid tools. Apart of Fixed deposit, you can also consider Money Market fund because of its FD liked of return but without the need to lock your money for the fixed period.
3. Review your insurance coverage to keep pace with your needs change.
- With growing financial responsibilities towards your family and probably growing debt, your previous basic protection is probably no longer enough. Review your own coverage to make sure in case of your untimely death, disablement or critically ill, you and your family don’t fall into financial hardship and has enough money to move on with life. You should also consider getting some protection especially medical coverage for your dependent as you will be the one paying the bill. This is crucial because your family is depending on you financially.
- Shop around for good value solution. It can save you lots of money.
- Talk to your adviser for personalized advice.
4. Do your Estate Plan. This is really important now!
- Of course you are not expecting to die while your family is young. But it didn’t take away the possibility of being taken suddenly by an accident or an illness. Having a plan in place in the event either or both husband and wife death is crucial, precisely because you have minor children depending on you now. You want to make sure, if the worst were to happen, your children’s living hood and future is protection. Planning for that possibility is being prudent and responsible, and it shows your family how much you care.
- Start talking to your financial adviser for personalized advice.
5. Start the commitment to save for retirement and children education funding.
- You may think that this is still a long time off. That’s why you got to use time to your advantage. There’s no such thing as ‘too early’. Having long time allow you benefit from the effect of compounding. Save at least 10% of your income for your retirement.
- With long time horizon, you can afford to take up slightly more risk for better return. Start doing this and you’ll thank yourself for doing this in the future.
- Work out how much you need to save for your children education with your adviser. The earlier you start, the lesser you need to save.
6. Find ways to enhance the return of your savings.
- By now you should have accumulated some amount in your savings, investment and EPF. Find ways and utilize available opportunities to enhance the return from what you have accumulated so far. Invest wisely, consider an asset allocation strategy that matches your time horizon and risk tolerance. Don’t ignore the potential long-term returns. Compounding effect is powerful when you still have the time.
7. Take advantage of Tax relief.
- As your income grows, taxation becomes an issue. Take advantage of ways to keep more of your income in your hands. Consider saving into tax relief schemes like Private Retirement Scheme and Children education plan.
8. Watch your debt to income ratio.
- You might start taking up car loan or housing loan. Try to limit your total monthly loan repayment at maximum 35% of your total income. If you are yet to take up housing loan, kept it at 15% max.
Independent and unbiased advice will help you to navigate your finances through this more stressful stage of your financial journey with more confidence. Wealthcare.my connect you to a professionally qualified and licensed financial adviser.