Last Updated on Apr 6, 2021 by Manonmayi

With growing responsibilities keeping your finances in check can be a challenge. So here are certain money moves for every age-group, which would help you manage and empower your personal finance. To get started on the right foot, let us first understand what personal finance is.

What is personal finance?

In a nutshell, personal finance means managing your money at an individual or household level by planning, budgeting, saving, and investing your funds. It is an unending process that helps you secure your financial life. If you get it right, you can retire a crorepati, no kidding.

Age-wise personal finance moves

Since time immemorial, people have tried and tested various money moves and passed it on for our benefit. While some of these may work magically (when coupled with efforts and discipline) for you, others may not, simply because personal finance is ideally personal and differs at an individual level. This means, there can be no one-size-fits-all money move.


For instance, you may have availed an education loan to study masters, which is due for repayment soon after the moratorium period. This entails a higher financial responsibility on you as compared to your mate who studied without availing a loan. This means, you start your career with a repayment burden and are already a point ahead of them in terms of liability.

Another example that shows personal finance is literally personal is the age at which you are looking to get married. If mid-30s is ideal for you to get married, your familial responsibilities would push for later in life. On the other hand, your pal who wants to tie the knot in their mid-20s will have greater responsibilities early on in life.

Naturally, what works for your friend may not work for you and vice versa. Therefore, genius is in tailoring money moves to suit your unique situations. Here’s a snapshot of how to manage your personal finance at every stage of your life.

In your 20s

Your 20s are perhaps the best years of your life. You graduate and take up a job, and maybe an additional side-gig as well. However, with this newfound financial freedom, it can be quite easy to go overboard and lose track of your expenses. Therefore, it is important to be disciplined, only then you can lay a strong financial foundation to build your wealth.

Take a look at how you can do this:

1. Start a contingency fund

The 20s is all about hopping from a job to another and juggling between several gigs until you figure out your desired career path. Thus, you may not enjoy a regular source of income, which can be quite challenging, especially during emergencies. To guard yourself against such odds, it is wise to create an emergency fund equal to at least 3 to 6 months’ expenses.

With access to such a financial cushion, you can glide through uncertainties without hassles. Further, parking the funds in a high-yielding savings bank account or a liquid mutual fund will give you easy and quick access to money in times of need and also earns you decent returns.


2. Start a retirement fund

With no family to take care of in your 20s, you have limited expenses and responsibilities. This allows you to save generously for your ‘retirement’, one of the most important goals of life.

3. Avoid taking credit unnecessarily

Credit comes with high-interest expenses. However, with limited responsibilities to tend to at this age, you may not have a necessity to avail credit. So, make the most of your young years by embracing an affordable and humble lifestyle. Consider living well within your means because this way, you won’t have reasons to avail credit.

4. Purchase a health insurance plan

High medical inflation makes availing healthcare services an expensive affair. This may force you to dip into your savings. But thanks to health insurance, you no longer have to worry about not having funds to meet healthcare expenses. All you have to do is pay the premium amount and your insurer takes care of your hospitalisation bills. This helps you shield yourself from high medical expenses and also avail quality treatment without compromise.

In your 30s

Your 30s are when you finally figure your desired career path and are most likely to stick with a job for long. Your salary increases significantly and so do your financial responsibilities. You may now have a spouse and children to take care of. Besides, you may also be looking to buy a home and save up for your children’s education. All in all, you will have a lot on your plate.

So, consider these financial habits to emerge victorious during your demanding 30s:

1. Budget your way to glory

A budget gives you a fair picture of your current financial situation and throws light on how much you need to save and invest for your future. In addition, it also indicates your affordability when it comes to spending and repaying debts. Thus, drafting a monthly budget can give you an overview of your finances and help you manage it well.

2. Purchase a term insurance plan

You certainly want your loved ones to be taken care of in your absence. However, unfortunate events can force your family to fend for themselves. To ensure that they get are fairly equipped during such times, insure your life today with a term insurance plan. The sum insured that they get on claiming your policy would give them financial respite until they find a long-term solution.

3. Make necessary additions to your emergency fund

The primary objective of maintaining an emergency fund is to save up for contingencies. The fund that you created in your 20s will serve you alone. With time, when you marry and have children, your obligations too pile up. So, consider making necessary additions to your emergency fund such that it adequately covers the expenses of your entire household. To this end, inflate your contribution to the emergency fund each time you welcome a new member or when your financial responsibilities increase.

4. Save for home purchase and maintain a low debt-to-income ratio

If you are looking to buy a house, start saving up for the down payment of a home loan. To do this conveniently, you can invest in a high-interest fixed deposit or even start an SIP in balanced or equity funds, as per your risk appetite. When availing a home loan, ensure that your EMIs don’t exceed 25% of your net monthly income. If you also use a credit card, then ensure that your total monthly outgo doesn’t exceed 30% of your income. This way, you can meet your household expenses and save for various goals without compromise.

5. Avail health cover for your loved ones

The health insurance that you bought for yourself in your 20s covers you against monetary losses due to medical reasons. Likewise, whenever a new member is added to your family, ensure that you avail a health plan for them too. One way of doing this is by requesting your insurer to add your spouse and children to the same plan as yours or better still, purchase a family floater plan that covers all the members of your family.

6. Cover all your assets

Over time, you may buy a comfortable home and a high-end sedan to enjoy a decent lifestyle. However, simply owning these assets is not enough. It is necessary to take a step forward and protect such high-value assets by insuring them. Compare various policies and sign up for the best one depending on your insurance needs. This should compensate you if your assets are harmed.

7. Continue saving for your retirement

After accommodating all the expenses and meeting familial responsibilities, you may find it difficult to save for your retirement. Nonetheless, it is extremely important to look at the bigger picture and shore up your retirement savings.

In your 40s

When in the 40s, you typically do financially better as compared to a decade ago. Your children are growing up and will soon join college. This makes providing for their higher education a top priority. With little money left to spare for your sunset years, it is important to plan your finances smartly and allocate your income to expenses, investments, and retirement wisely.

Consider using these money moves during your 40s:

1. Continue contributing to your retirement fund

While providing for your children’s college is essential, don’t forget to continue saving up for your retirement. You can fund your children’s studies using an education loan or scholarship, but your only source of income during retirement would be what you save now. Compromising your old-age savings today may force you to postpone your retirement or depend on your children. To avoid this, always put some bucks in your nest-egg.

2. Evaluate your health insurance needs

Considering your growing age, upgrading your health insurance needs can help you complement your current health conditions. But this doesn’t necessarily mean you should buy a new health plan as it would attract an expensive premium. Instead, avail a top-up or super top-up insurance plan in addition to your primary plan and enhance your health plan in an affordable way.

In your 50s

Your 50s are when you reach a peak in your working life. You may be a higher authority earning a fat check. On the personal front, your children may be out of college, ready to start a career and support themselves. This means, you can save relatively more.

Some best money moves during these years are as follows:

1. Increase your retirement savings

With limited responsibilities, you may be in a better position to ramp up your retirement fund. For this purpose, consider directing a hefty portion of your savings to your nest-egg.

2. Close all your debts

You will certainly not want to have debts hovering over you when you approach retirement. So, get rid of them by paying off your debts during these years. Consider foreclosing your loan or making part-prepayments towards it. But, do this only after conducting a cost-benefit analysis of repaying your loans before the tenor.

3. Invest in a second home

If you have several lakhs to spare, you may want to invest in a new high-value asset such as a second home. On renting this property, you would enjoy the additional rental income, which you can use during retirement. So, if you have some lakhs to spare, consider this option.

In your 60s

Finally come your 60s, when you retire after all the hard work you’ve put so far. However, your retirement also marks the end of employment, which means irregular income. So, at this time, it is vital to manage your retirement fund well and keep your finances in check so as to maintain your desired standard of living.

Here is how to monitor your retirement fund:

1. Draw up a will

Your first move should be to write a will on consulting a lawyer. This way, you can rest assured that your hard-earned wealth and assets would be in the right hands and not misused in your absence. When drawing your will, be as clear and elaborate as possible so your inheritors get possession of their rightful share without impediments. Also, keep your family in the loop to avoid any consequences.

2. Rework your investment portfolio

Finally, consider moving your investments from high-risk asset classes like equity to low-risk ones such as FDs or bonds. The latter offers safety and guaranteed returns, which keep your savings from eroding and thus help you lead a comfortable retirement.

By now, you may have learnt why effective management of personal finance is inevitable to live each stage of your life without worries. So pick up the money moves that best suit you and make the most of your hard-earned money. Remember, you reap what you sow. Act accordingly!

Hungry for more? Here are other articles on personal finance management that may interest you 🙂

Aradhana Gotur
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