8 Dos And Don'ts For Saving Money In Your 30s

Saving is a way to accumulate money for future needs. People often overestimate their ability to repay debt - and your heart might get in the way of a budget when buying a house or taking that extra overseas trip. If you believe that your late 30s and 40s are when you should start thinking about your retirement, the belief can make it very difficult for you to live the retirement of your dreams and also prevent you from experiencing several valuable benefits.

It's important to save towards an emergency fund and it should be the first objective before any other saving goal. Income protection insurance can also be an important addition to your financial cover, as it provides a certain amount of your usual income if you're unable to work for an extended period of time due to an illness or injury.

Next, make sure you have repaid as much of your ‘bad debts' as possible, reduce your credit card limits, make sure you can document a pattern of regular savings, and have all income and expense documents at hand. For near-term goals, opt for recurring deposit, liquid funds, fixed deposit or short-term debt funds.

According to the Social Security Administration , 1 in 4 of today's 20-year olds will become disabled for a period of time before reaching age 67. Most people don't have enough savings to cover months, let alone years, of lost income if they aren't able to work.

Forget everything you picked up about investing money from The Wolf of Wall Street - real life investing isn't about money laundering, stock fraud, or throwing money at people from your yacht. Unfortunately, many people in India do not understand the facts about retirement planning and live above their means.

Of this, 25-35% should be for home loan repayment and the rest for other forms of debt, including car and credit card loan. That money should go to investments or savings (or at least a portion of it should). So, by starting your retirement planning early, you not only get to generate considerably higher returns until the time you retire but are also able to reduce your tax burden.