SERIES: How to be money-wise in your 30s

Last updated on 5th December, 2018 at 02:38 pm

This decade should bring more money but it will also bring more goals to finance, like getting married, starting a family or buying a home.

Your 20s are over and your focus has changed. This decade should bring more money but it will also bring more goals to finance. Are you investing in your career or saving for a wedding? Maybe you’re starting a family and considering buying your own home. Now is the time to build and protect your wealth. Hopefully, you have established sound money practices and find yourself on a firm financial footing. Follow these four steps to keep on the right path.  

1 Recalibrate your budget

However much your income has changed, you need to relook your budget to fund your new goals. Your income should have increased over the years, but you’ll probably have to cut in one area to spend in another. Want to pay for a bond? Socialising every Saturday may need rethinking. Saving to have – and raise – a baby? Cut your spending on clothing and weekends away. See the picture? Priorities change and so will the allocation of cash in your budget.  

2 Build your retirement savings

You should already be part of a pension or provident fund if your company offers one. But it may not be enough to provide sufficiently for your future. If you want to be financially ready to retire at 60+, you should aim to consider another savings product, such as a retirement annuity (RA). RAs offer major tax benefits and you can contribute to one for as little as R300 a month. Remember: if you change jobs, do not cash out your provident or pension fund. Roll it into your next company’s plan.  

3 Open an investment account

Your retirement planning is on track and you have a little money left. Investing is one of the most effective ways to build wealth and, contrary to popular belief, you don’t need a lot of money to get started. Work out your goals, when you need to access money, whether you want to benefit from tax incentives and how you feel about risk. Don’t understand asset markets? Don’t worry, investment managers do that for you. Ask a financial planner about different funds and products. There are lots of risk and return options available.  

4 Build a rainy-day stash and get insured

Life doesn’t always go as planned. You could be retrenched or need root canal treatment that is not covered by medical aid. It’s important to have access to money for unplanned events. Ideally, your savings should cover three to six months of living expenses. Also, as your assets – or your family – grow, you need insurance to protect them. If you are buying a house, you need home and contents insurance. If you own a car, it must be insured. If you have family members who depend on you financially, you need life insurance. And if you have a baby, it’s time to start an education fund.