How to Plan Your Money Before the 30s?
Money is a strange thing & it’s a big differentiator in your life. It is the symbol of your success too. When you first start earning your own money, it is important to realize how you spend them.
When you have the money, you have many things to do with them. You just need to decide the right way to spend. Yeah, it is hard to manage your cash at an early age as we all have some fancy dreams to fulfill with money.
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1.Plan the Future
Yeah, no one indeed knows how long he/she will live. So, planning for your future is a bit tricky. But according to Tony Robbins, the basic structure of your financial status creates two phases in your life.
One is the accumulation phase & the other one is the decumulation phase. In the first phase, you earn money, you save them, & you invest them. That means you are securing your future when you’ll not be able to make money.
In the second phase, your built source of income in the accumulation phase will help you live your life without worry.
2. Define Success to Yourself, Invest Your Money
“Are you a consumer or are you an owner? You are not on target unless you become an investor. You don’t want to just buy an Apple phone — you want to own Apple.”Tony Robbins
According to Tony Robbins, you need to know what success is meant to you. If success means owning an Apple iPhone to you, that’s okay.
But in the bigger picture, success could be holding a company like Apple. Isn’t it? This thought is the differentiator between a winner & a typical established person. So, make it clear to yourself that if you are happy with buying an iPhone, or you want to own a company like Apple.
Here, Tony Robbins, what exactly means is not just buying some Apple stocks; he is saying to invest your money in index funds. This investment will help you to capture small stakes in various companies.
3. Make the First Move & Stay in the Game
It is always essential to make the first move. You have to start making the most important decisions of your life. You have to set this portion of your paycheck as security for your future.
According to Tony Robbins, please don’t take it as a retirement plan or savings account. Instead, you can think of it as your ‘freedom fund.’ When you are in the second phase of your life, it will be a significant differentiator than how much you had paid to yourself at the stage when you were earning.
Tony Robbins suggests it doesn’t matter in what way you want to invest your money. The most important part is to open at least one account to support.
You have to maintain consistency in contributing to that account. It is better to start as earlier as possible. And all thanks to the outcome of the compound interest. It can make your money snowball over time.
One more important thing is to stay calm. Don’t panic while the market is crashing. In his book ‘Unshakeable,’ Robbins says that the market will not be in a downturn for always.
It will definitely bounce back. You have to keep your calm. Once you enter into the game, stay in it. Never give up.
4. Automate Your Investment
“The income that you get off those investments will allow you to live the life you have today without working.”Tony Robbins
This means that you will reach a point in your life where you will live your life like you are living now. But the difference is you are earning now & you will live that same life at that point of life without working. For that, the easiest way is to automate your investment.
“You have to decide that a certain amount of money that you make in your 20s is going to be yours to keep and that you are going to be an owner- an investor – not merely somebody that’s constantly struggling to buy more things”, says Robbins.
You have many ways to start investing. You can actually automate it by making your employer deducting a certain amount of money from your salary every month.
It will automate your investment & you don’t have to worry much about saving money while you are buying some stuff.
5. Create Diverse Investments
Besides you automate your investment, you should make other investments too. Don’t just make your money stuck at one source for the future.
You can make investments in the stock market, not necessarily everything you have. Invest a portion at least. This means don’t put all your assets in one place. Make it diverse. This will help you when the market is in a downturn.
6. Always Take the Advantage
“When the market is crashing through the floor, people will give you their house, they’ll give you their stocks for next to nothing. They want out. Those are the greatest opportunities in your life”, says Robbins.
You can take advantage here. You can buy the shares when the price is next to nothing. Then wait for the market to bounce back again. Then you can sell them for profit.
In his book ‘Unshakeable,’ Robbins says, “Yes, there’s going to be some significant corrections,” Robbins said about the stock market. Your job should be to take advantage of that.”
Make sure that you are not paying any unnecessary fees. When you invest in mutual funds, you may be paying 3% to 4% service fees. According to Robbins, paying high service fees doesn’t mean that you will get high returns.
So, you can try the low-cost index funds. When you are in your 20s & earning enough, you should start thinking about your money seriously.
What you are earning today makes some ways that will make you enjoy your life in your decumulation phase without any worry. You just have to choose the right way to put your money in & make the best use of it.
You can also read: 6 Important Things That Coronavirus Pandemic Taught Me About Money