Top 10 personal finance essentials before you turn 30
When Filipinos approach the age of 30, it’s a pivotal time to establish a solid foundation for financial success. The choices made in these formative years can significantly impact future financial well-being. Here are the top 10 personal finance essentials that you should have in place before turning 30, empowering you to navigate the complexities of your financial journey.
1. Emergency fund
Building an emergency fund is a crucial first step in financial planning. Aim to save at least three to six months’ worth of living expenses in a separate account. This fund acts as a safety net during unexpected events like medical emergencies or job loss, providing financial security and peace of mind.
In the Philippines, where family ties are strong, having an emergency fund ensures that you can navigate unforeseen challenges without compromising your financial responsibilities to loved ones.
2. Manage debt
Addressing and managing debt is key to financial freedom. Filipinos should focus on clearing high-interest debt, such as credit card balances or personal loans. Creating a systematic debt repayment plan and avoiding unnecessary loans will free up resources for future investments and financial goals.3. Budgeting skills
Creating and adhering to a budget is a fundamental skill for effective financial management. Track income and expenses, categorize spending and identify areas for potential savings. A well-crafted budget not only helps you manage daily finances but also guides you toward achieving short-term and long-term financial goals.
4. Invest for the future
Investing early is a powerful way to grow wealth over time. Explore investment options such as mutual funds, stocks or government savings programs. You can take advantage of instruments like unit investment trust funds, mutual funds, variable universal life insurance, stocks and Pag-IBIG Modified Pag-IBIG II (MP2) savings program.
Starting early allows your money to benefit from compounding, contributing to long-term financial growth and security.
5. Retirement savings goals
While retirement may seem distant, Filipinos should set clear retirement savings goals before turning 30. Contribute to government-backed programs like the Social Security System (SSS) and explore additional retirement accounts such as the PERA (Private Equity Retirement Account). Start a retirement fund to enhance your retirement nest egg.
In a culture where familial support is highly valued, securing your retirement ensures that you can maintain financial independence and continue to support loved ones as needed.
6. Insurance coverage
Mitigate financial risks by ensuring you have adequate insurance coverage. One should prioritize health insurance to protect against unexpected medical expenses. Additionally, consider life insurance to provide financial support to family members in case of unforeseen events.
In a close-knit society like the Philippines, having the right insurance policies in place safeguards your financial well-being and ensures that your loved ones are protected.
7. Build a credit history
A positive credit history is essential for various financial transactions. Before turning 30, establish and maintain good credit by paying bills on time and managing credit responsibly. A strong credit history opens doors to better interest rates on loans and facilitates various financial opportunities.
8. Create an additional income stream
Diversify income sources by exploring additional revenue streams. Filipinos can leverage their skills and passion for freelancing, part-time work or small businesses. Having multiple income sources provides financial flexibility and resilience, especially in times of economic uncertainty.
9. Continuous learning
Investing in continuous learning and skill development enhances your employability and earning potential. Identify areas for professional growth, pursue certifications and attend workshops or training sessions. Filipinos should view education and skill development as a lifelong journey that contributes to long-term financial success.
10. Set clear financial goals
Define and prioritize your financial goals before turning 30. Whether it’s saving for a home, starting a family or pursuing further education, having specific objectives helps guide your financial decisions. Break down these goals into achievable milestones, creating a road map for your financial journey.
Bonus tip: Start tithing! It is important to understand the principle of stewardship according to the Bible—understanding biblical financial principles will transform your life in many ways.
As Filipinos approach the age of 30, incorporating these personal finance essentials into their financial strategy is crucial for a secure and empowered future. By building an emergency fund, managing debt wisely and investing strategically, one can navigate the complexities of their financial journey with confidence. These practices, rooted in the Filipino culture of strong family ties, ensure that financial stability and support extend beyond individual success to benefit the entire community. INQ
Randell Tiongson is a registered financial planner of RFP Philippines. To learn more about financial planning, attend the 106th RFP program this March 2024. Email [email protected] or visit rfp.ph.
