While you can get away with a few bad financial decisions as a young adult, it's time to get serious about your money now that you’ve hit the big 3-0.
Here are six financial mistakes that you don't want to be making in your 30s.
1. Not talking about money when you are planning for marriage
Discussing your financial plan, personal finances and spending habits with your partner is crucial before moving your relationship to the next step. This will prevent lots of disagreements and fights down the road. In fact, such topics should not be discussed just a few months before marriage. By then, you would have invested time and emotions into the relationship which causes couples to ignore major financial differences.
2. Going all out for first child
Due to lack of experience and the excitement of being first-time parents, many new parents make the mistake of overspending on their first child. You might want your child to grow up in a comfortable environment but ask yourself if it's necessary to spend thousands of dollars on a stroller or fancy clothes in different colours?
Rather than letting your child live comfortably, choose to let them live securely instead. The amount of money you save can be entrusted into his/her education savings plan such as Aviva's MyEduPlan which provides a 100% capital guarantee1.
3. Not prioritising retirement
There are many commitments when you are in your 30s but retirement planning should never be neglected. Money needs time to grow and by starting to build your retirement funding at a young age, it can be easier to retire early and have sufficient funds to last you through retirement.
There are many ways to save and invest to build up your funds. If you are not savvy with investments, consider an endowment savings plan from an insurer or a bank where you can contribute to plan on a monthly basis.
An example would be Aviva's MyRetirement which offers guaranteed returns2 of up to 2.38% per annum and choice of retirement age – 50, 55, 60, 65, 70 or 75 Age Next Birthday (ANB)3 before you start receiving the payouts for retirement.
4. Not having a hospitalisation plan
Your employee insurance may cover work-related injuries, visits to the general practitioner (GP) and hospitalisation. But one thing to remember is that the health insurance cover from your company alone isn’t enough.
Employee health insurance usually isn't portable which means if you ever leave the company, you won't just lose your job — you'll lose your health coverage too.
It's better to take out an insurance policy early when you're still healthy as premiums are likely to be lower.
5. Not planning for long-term care
It’s never too early to start planning for your future long-term care need should the need arise unexpectedly. It’s a common misconception that you only need long-term care in your senior years. Long-term care needs may arise due to a sudden event such a serious accident, a stroke or a chronic illness such as diabetes, which could happen to anyone at any age.
From 1 October 2020, all Singaporeans and PRs aged between 30 and 40 years will be covered under CareShield Life – a long-term care insurance that provides basic financial support should you become severely disabled. For higher coverage on top of your monthly CareShield Life payout, consider getting a supplementary plan such as MyLongTermCare and MyLongTermCare Plus.
6. Not having critical illness insurance
Critical illness insurance often gets put on the back burner as most people in their 30s think they are still young and healthy.
While your health insurance takes care of hospitalisation and perhaps outpatient treatment, your critical illness plan gives you a sum of money that you can use to take care of all other costs such as regular bills and daily expenses that still continue despite your loss of income while on no-pay leave.
At younger ages, your premiums will also be cheaper. Using Aviva's My Early Critical Illness Plan II as an example, we look at how age will affect the yearly premiums for your insurance:
|Profile||30-year-old male, non-smoker||45-year-old male, non-smoker|
|Coverage||S$200,000 sum assured till age 60||S$200,000 sum assured till age 60|
Insurance plans such as My Early Critical Illness Plan II provides flexibility for policyholders as it enables them to choose the duration of policy terms – from 10 years up to age 99.
The future is full of uncertainties and your best bet is to live within your means and be prepared for rainy days and start saving today!
Ready to get serious about your finances? Get in touch with us today to find out how.
¹100% capital guarantee: The total Guaranteed Cash Benefits payable will be at least 100% of the total premiums paid over the policy term.
²Guaranteed returns of up to 2.38% per annum is only upon policy maturity. This is based on an entry age of 17 Age Next Birthday (ANB) with eight years limited premium payment term where customer will receive Monthly Guaranteed Retirement Income of S$1,000 based on 75 (ANB) as selected Retirement Age.
3At start of the Plan, you can choose from our range of Retirement Ages available. They are 50, 55, 60, 65, 70 and 75 (ANB). Payments of the monthly Guaranteed Retirement Income Benefit will start one month following your selected Retirement Age.