As you enter your 30s, you may find yourself with more responsibilities, whether that be building your career, caring for your ageing parents, or starting and growing a family. This decade is a crucial time to start focusing on your finances and make smart money decisions that will set you up for success in the long term. However, this will involve more than just saving and investing. It also means being proactive and taking control of your overall financial condition to ensure that you are on track to meet your goals.
In this article, we’ll discuss some smart money decisions you can make in your 30s to achieve financial stability in Singapore. From creating a budget and paying off debt to investing for the long term and protecting your assets, these tips will help you build a solid foundation for your later years.
1. Create a budget and stick to it
One of the most important things you can do to improve your financial health is to create a budget and stick to it. This will help you understand your income and expenses, and identify areas where you can cut back or save more. In fact, by the age of 30 years old, the typical Singaporean would have at least $73,000 worth of savings accumulated.
When it comes to budgeting, you can keep an updated spreadsheet on your income, variable expenses (like groceries) and fixed expenses (like rent). Alternatively, you can use expense tracking apps like Wally, Spendee and Planner Bee to have an overview of your finances and see where you can make adjustments. As you plan, remember to be realistic and flexible with your budget as unexpected expenses will inevitably come up.
2. Pay off high-interest debt
If you have high-interest debt, such as credit card debt or student loans, it’s important to prioritise paying this off as soon as possible. The longer you take to pay off this debt, the more you’ll end up paying in interest. Consider speaking to your bank or consolidating your debt to get a lower interest rate.
3. Build an emergency fund
An emergency fund is a savings account that you can use for rainy days, such as a car repair or a medical bill. As a rule of thumb, have at least three to six months’ worth of living expenses saved up in case of an emergency. This will help you avoid going into debt or using high-interest credit cards to cover unexpected expenses.
4. Invest for the long term
In your 30s, you likely have more stable and steady income, with time to wait for your money to grow. At this stage, it can be a good idea to start thinking about long-term investments. Some of your options may include stocks, bonds, and unit trusts to help build your wealth over time.
That being said, it is important to do your research beforehand and understand the risks and rewards of different investment options before parking your money. You should also continue to explore other types of investments, receive second opinions on your portfolio, and reassess your strategy regularly as the markets evolve.
5. Save for big expenses
In the near future, you may have more big expenses on the horizon, such as planning a wedding, buying a home, or starting a family. It is thus vital to start saving for these expenses early on to ensure you have the funds when you need them. Consider setting up a separate savings account or investing in a high-yield savings account to maximise your earnings.
6. Start saving for retirement
Additionally, it’s never too early to start saving for retirement, and your 30s are a great time to ramp up your efforts. Check out the Retirement Sum Topping-Up Scheme where you can make cash top-ups to your Special Account (SA) or Retirement Account (RA). Or transfer your Ordinary Account savings to SA to take advantage of the higher interest. It is crucial to save as much as you can, as the earlier you start, the more time your money has to grow.
7. Protect your assets with insurance
Finally, you may eventually have more assets to protect, such as a home or family. It’s important to have the right insurance coverage to protect these assets in case of an unexpected event. Consider purchasing home and contents insurance and life insurance to safeguard your financial future. If you are considering a life insurance and protection plan, for example, it is important to take into account your current financial situation and the needs of your loved ones. How much coverage do you need to ensure that your loved ones are financially secure in the event of your death? How much can you afford to pay in premiums? Answering these questions will help you determine the right type of life insurance policy for your needs.
If you are looking for temporary coverage, term life insurance will be an option worth considering. For example, if you have a young family and want to wait until your children are financially independent, a 20-year term life insurance policy may be a good fit.
Term life insurance is a type of life insurance that provides coverage for a specific period of time, such as 10, 20, or 30 years. It is designed to pay out a death benefit in the event the insured person passes away. Term life insurance is typically the most affordable option, making it a popular choice for primary breadwinners or those on a budget in Singapore.
Once you have procured the necessary insurance coverage, it is a good idea to review your term life insurance policy periodically to ensure that it still meets your needs. As your circumstances change, you may need to adjust your coverage. With the help of a trusted insurance broker in Singapore, you can safeguard your financial interests in your 30s and beyond. For more information on life insurance and other types of plans, don’t hesitate to reach out to Expat Insurance today.