by 35 is an age when most individuals have a family, are at a stable point in their career, and are planning for their kids’ future. To ensure that they take care of their responsibilities without facing any significant hurdles, achieving financial security is a must.
However, to do so, proper financial planning and discipline are necessary. So, if you are planning to achieve financial security before turning 35, keep reading.
7 Steps to Achieve Financial Security Before Turning 35
With rising cases of lifestyle diseases and increasing healthcare costs, a medical emergency in the family is enough to break the bank. Thus, to ensure that you or your loved ones get the best possible treatment without straining the family’s finances, having a health insurance policy is a must.
It provides cashless treatment facilities, covers hospitalisation costs, offers add-on cover for critical diseases, annual health check-ups, and more. Additionally, under Section 80D, you get a maximum deduction of ₹25,000 within a financial year for paying health insurance premiums.
Read more about: How to Maximise your Family’s Health Insurance Benefits
No matter how much you earn, planning a monthly budget is crucial. It should adequately cover your essential monthly expenses, keeping aside something extra to add to your savings and cater to unplanned expenses.
Tracking your daily expenses is an excellent way to stay on budget. It helps rule out unnecessary costs and utilise them elsewhere, like an upcoming event or any other household expense which may require you to withdraw from your savings.
Make long-term goals like buying a house, your children’s higher education, marriage, retirement, etc., and invest accordingly. Moreover, spread your capital across various assets to ensure that your returns are not affected by market volatility.
For instance, you can allocate one part of your investment corpus to assets like stocks, bonds, or mutual funds and another part to tax-saving schemes like unit-linked insurance plans (ULIPs), equity-linked saving schemes (ELSS), public provident funds (PPFs), etc.
Additionally, you can go for fixed deposit schemes to ensure that you have some degree of liquidity in case of emergencies.
Life insurance policies come with numerous benefits other than financially securing your family in case of your unfortunate demise. Besides, some life insurance provides returns in the form of bonuses if you survive the policy tenure, offering dual benefits of savings and insurance.
You can use the amount to fulfil long-term goals or reinvest it in a different scheme. Apart from this, you can use such policies as collateral to avail of loans up to a certain percentage of the sum assured.
Moreover, paying life insurance premiums allows you to claim tax benefits worth ₹1.5 lakh per financial year under Section 80C. Also, you can opt for add-on covers like terminal illness riders, cover against accidental disability, and more. They help financially safeguard your family in case you have medical conditions that can severely strain your savings.
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If you have any ongoing loans, it’s time to prioritise paying them off. Long-term loans may be easy on the pocket in terms of EMIs; however, if you consider the total interest paid, it is actually costing you a lot more.
You can consider setting aside an extra amount each month to increase your EMI payments or to make part-prepayments to reduce the total outstanding amount. Timely repayments also ensure a high credit score, enabling you to opt for another long-term loan later in life, like a home loan or an education loan for your children.
From the part of your income that you save every month, set aside a particular sum in a different bank account. This will serve as a fund you can use in emergencies.
Additionally, you can invest in a short-term recurring deposit scheme and add the maturity amount to this fund. Keep repeating this method for some years, and you will have a significant corpus, which can help you meet various financial needs.
Read more about: Your child’s financial future- the simplest way to secure it!
You should consider investing in assets that provide a consistent revenue stream in the upcoming years. They include dividend stocks, high-yield savings accounts, systematic withdrawal plans, annuity schemes, monthly income plans, Post Office Monthly Income Scheme (POMIS), etc.
Another vital thing to remember to achieve financial security before turning 35 is to avoid credit card debt at all costs. Impulsive buying with credit cards can lead to a debt trap, which can wipe out all your savings. Thus, it is advisable that you use this financial tool only up to a specific limit.
Moreover, following the steps mentioned above will require a lot of financial discipline. The results may not be visible in the short term. However, down the line, it will be worth your efforts
