Strive to Reach Financial Goals
Heed These Commandments Before You Hit 40
Pushing into your late 30s and encountered your share of monetary challenges? It may be high time you redirect attention to your money goals. Once you begin saving a chunk of your earnings regularly, you up the chances of accumulating sufficient retirement savings by age 40.
People have different needs, responsibilities, and varying savings goals by age. For most Filipinos, though, hitting 30s is the time when they have become more or less financially organized. The mid- to late 30s is usually the time when most Pinoys are caring for their parents, or sending kids to school.
Most young people will probably not realize the importance of managing their finances and give little thought to what to accomplish by 30, until something life-changing hits them. It could be a big medical crisis, the loss of a family breadwinner, or a global health crisis like the Covid-19 pandemic.
Take a moment to ponder on these financial commandments that may help you hit your savings goals by age 20, 30, or ideally before 40.
‘It is Never Too Late To Start Saving’
Saving early and as frequently as possible is the best approach. Sadly, there are always persons who learn about opportunities that can allow them to grow their funds only after in late adulthood. There ought to be someone in your family who can point out the advantages of handling personal finance for 20 somethings.
Also, while it makes a whole lot of sense to invest earlier – in one’s 20s or earlier, many things fall into place when one has stayed long in a job and reaped benefits, or started one’s own business. At whatever life stage, the biggest way to build wealth is still through saving. Even personal finance blogs for 40 somethings may be helpful, but one needs to really seriously consider ways to maximize savings opportunities.
There are lots of circumstances in life, like being blessed with a child, moving to a new home along with other age 25 to age 35 milestones, that may eat up the savings of average earners. So as no to be bogged down by surprising turn of events necessitating money, strive to have multiple income streams and ensure that an emergency cash fund stays in place.
One can then gradually increase the emergency fund, or middle age money (if saved at a later life stage). Increasing your emergency cash fund may take forever – or it can happen now, depending on whether you make the right decisions now.
Having money under 40 can prevent financial ruin, more so since you never know how the future will unfold. Experts who give good advice on reaching money goals suggest having an accessible emergency fund equivalent to at least three to six months’ worth of expenses set aside. The temptation to dip into that fund may be there, but discipline should come from within.
Long-suffering savers who have put their money in a traditional savings account have seen how rock-bottom the rates are. There are much riskier investment options like stock market investing.
Peer-to-peer (P2P) lending is an alternative crowdsourced investment that offers higher-than-average returns compared to what a traditional bank savings account can give. Compared to traditional lenders like banks, a P2P lending platform eliminates queues, tedious application process, intense scrutiny at the bank or lending agency location, and so on.
So how does an individual earn from peer-to-peer lending? The investor earns from the interest on the loan as the borrower makes payments. Once the loan money is repaid, the lender can reinvest the funds. Reinvesting ensures that the returns will not decline in value.
With a P2P funding platform like Blend.ph, a lender can invest a minimal amount he is comfortable to shell out, and then see how it turns out. A huge number of people who have been aided by Blend.ph are small business franchisors who have grown big, and their franchisees.
`Thou shalt not accumulate more debt than you can handle’
One of the wise moves any average-working professional or entrepreneur can make is to ensure being debt free by 40. Know the pitfalls of using plastic card. Not paying credit card balances in full every month spells trouble, so make it one of your goals before 30 to nip unnecessary credit card spending in the bud.
Even entrepreneurs stand to gain much by using cash instead of credit card, which charges high interest if you take out a cash advance. Balancing cash and credit card spending is good. Continuing to use credit cards may contribute to maintaining good credit history, nonetheless.
Since the 30s is that time between landing first jobs or contracts and empty nest, it is also the time when some financial milestones would have already been made. A money-smart person would have picked up a few strategies and lessons at that age, including managing debt.
At age 40, a person is at the halfway mark between two locations – jumpstarting a career (for example, in a corporate or blue collar work setting) and the cusp of retirement. Way before reaching that age, then, a person will do well to ponder, “how much savings should I have at 40?” so as to avoid bad habits like getting into debt.
Try calculating your net worth by adding up all of your assets and deducting your debts from the sum. In terms of average net worth 30 year old people who have been working for some time may have a high number, but it does not tell the whole story.
In the US, most Americans in their 20s and 30s are still paying off student loans and handling other financial priorities like essential family needs. Sharp decline in average income may happen, like it did for most during the pandemic, quashing financial milestones.
Personal situations or crises, or conversely, triumphs, may occur at age 20 or 50. Go-getting individuals may be attaining money goals before 30. Other people who have encountered setbacks may be starting over at 50 financially, often because they have accumulated more debt than they can handle.
`Thou Shall Not Put All Your Eggs in One Basket’
Not putting all your eggs in one basket means spreading the risk (following the fact that all investments entail risks). It is crucial to consider diversifying where you invest your hard-earned money, but do not over-diversify. Spreading your funds across too many investments may cause you to lose out on growth.
Take a good, hard look at your earning capacity and what you want to achieve – is it to be able to save for a family house in about 10 years? Or is it to have retirement savings by age 40? Then zero in on your risk tolerance and time horizon, before going ahead and investing on assets that will work best in your portfolio.
Veer away from putting all your millennial savings, or middle age money, in what you may perceive as an all-weather investment strategy. Peer-to-peer may serve your investing requirements well if you regard it as a good way to rebalance your portfolio.
In many instances, young and old investors alike may trust their instincts, and go for investments that would not give them sleepless nights. Investors who want to play it safe or take the conservative route, owing to the financial goal they are saving for, may opt to invest in something tangible and appreciates over time.
Some examples of not too volatile assets or forms of investments that can increase in monetary value as time goes by are real estate; gold or tangible items like art & antiques; a cryptocurrency that has become mainstream; and peer-to-peer lending.
Reassess Your Money Goals
Checking financial health is something many people overlook. One of the things your future self will thank you for is taking time to reassess your money goals.
Get an honest answer to the question, “How am I doing financially for my age?” and create a better wealth-building plan. Turn to a reliable peer-to-peer funding platform, like Blend.ph, for effective ways to lower risk while reaching your long-term financial goal. Ask us now how you can use compound interest to your advantage, and attain your money goals.
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