What is the fuss?
All of us develop a certain relationship with money.
Some want more, and some conserve what they already have.
Some take more risks, while some play the patient long-term game.
Some follow their passion, and money finds them somewhere on that path. Some chase money all their lives.
No matter your relationship with money, it changes in your 30s. In your 30s, you are either peaking in your career or finding yourself in a mid-career crisis. Additional family responsibilities weigh on you.
You are now a more mature individual who knows what suits you and what doesn’t. You have real-world experience of how money works. Your money and investment goals become more apparent.
As someone in his late 30s who will see the magical 40s soon, I thought of listing the key ways my relationship with money changed in my 30s.
I hope this helps some of you become more aware. Or for some of you to know that others are in the same boat 🙂.
Let’s get started.
Change 1: Health Takes priority
In your 30s, your somewhat careless eating habits in college and early job life will catch up. Your annual health checkup may reflect deficiencies, such as Vitamin D (hear all 9-5 air-conditioned office dwellers).
You might be diagnosed with borderline stuff, borderline high cholesterol, borderline diabetes, etc.
You will realise your stamina and gut health are not what they were once. You need to be careful what you eat and how you stay healthy.
Investing in your health takes priority. It can vary from buying organic and direct farm-to-table groceries to more frequent health checkups, doctor consultancies, fruits and multivitamins, etc.
Health-related products such as ergonomic chairs, back-friendly mattresses, neck-friendly pillows, home air purifiers, air purifying plants, sleep tracking gadgets, diet reminder paid apps, etc., become a consideration.
And the important bit: health insurance. Yes, your company gives you basic health insurance, which provides primary coverage. With frequent job changes and career uncertainty, health insurance is a checkbox you always want to be ticked.
Some people take it a notch up by taking personal health coaching, nutritionist subscriptions, gym memberships, etc. Health-boosting hobbies such as Zumba classes, morning bicycle groups, and weekend treks- find their place on your calendar.
Many of these require incremental expenses every month. The part of your money going towards it starts being categorised as essential spending, similar to roti, kapda and makaan (food, clothes and shelter).
Change 2: Life Term Insurance
Many people are not aware of a life term insurance. And those who are sometimes delay taking one. I am one of the latter ones.
As you enter your 30s, you realise that some of your family members depend on you, fully or partially.
In your 30s, you might also encounter an unfortunate demise in the extended family or your immediate friend circle. You realise life is fragile and need insurance if something unfortunate befalls you.
The earlier you take term insurance, the cheaper its premium is.
From personal experience, term insurance is a gift that tells your family members you think about their well-being.
Some people might take it up a notch further and make a will, legally declaring how their fortune will be divided or donated after they bid their final goodbye.
Change 3: Cautious about buying depreciating assets (home/car)
You now know that some assets depreciate. As soon as you buy them, their value drops 10–20% and decreases every passing year.
You have experienced taking at least one debt by now. You probably don’t like it. The pressure of paying the EMI and the floating debt interest rate keeps ringing in your head.
The need to buy high-value assets decreases with widespread rental property options and transport systems. With folks changing jobs every 2–3 years, the cost of moving assets or maintaining them from a distance might not seem worth it.
Additionally, many now know how to make higher returns from the stock market, mutual funds, government bonds, etc. Hence, you start calculating the opportunity cost of investing a high amount in a fixed depreciating asset vs putting it in a wealth-compounding machine such as mutual funds.
Net net, you think twice and thrice before buying a high-value asset such as a car or a home. You prefer alternate wealth compounding options such as equity.
Change 4: Investment Risk Appetite Normalises
Your risk appetite somewhat normalises. You avoid extremely risky situations. You prefer a certain stability in life.
In your mid to late thirties, you have amassed wealth by breaking your back, and you want to protect it, not risk it all.
When investing, you spend more time researching and seeking second opinions.
You make fewer impulsive decisions. You try to balance possible risks, have Plan Bs, and evaluate what-if scenarios. For example, you might pass on a new scheme to double your money in one month.
You might build up an emergency fund in a liquid asset such as Fixed Deposit or Liquid Mutual Fund.
You might even consider investment assets that generate passive income.
Those who always had 100% equity allocation now dabble in stable assets such as debt and bonds. Risk-balanced returns take priority.
Change 5: Face-off with the Inflation Bosses
Inflation is not a mere 5–6%, as broadly quoted by surveys and in media. Food inflation is the least of your worries, as food and house supplies now account for less than 10% of your monthly household income.
When it comes to fighting inflation, you have passed the stage of countering foot soldiers (food/grocery inflation). You now go head-to-head with the bosses.
Real estate inflation can be anywhere from 5 to 20% per year, depending on the place you live in. A simple shopping mall or metro station opening can overnight cause nearby real-estate prices to inflate by 20–30%. Education inflation is 10–15% per year. Travel inflation is in the same range.
Your savings and wealth generation plan needs a change. Some compromises are in order. Leaving the posh part of the city to live in an affordable place makes sense. Some expensive hobbies might get paused. Cheaper alternatives are opted for, such as trains over flights, home cooking vs outside eating, and waiting for the Diwali Big Billion online sale to get your next gadget.
Investment habits change as well. For example, you give post office investment schemes a pass, which no longer beat inflation, and more inflation-beating investments, such as equity.
You bring out your A-Game; after all, it’s the inflation bosses you are up against.
Change 6: Spend Money to Buy time
Your time is being demanded by your job, family, and the occasional hobby you want to pursue.
Time is invaluable. Once gone, it never returns. You prioritise to save time and are willing to spend money to do so.
Subscribing to food and grocery deliveries instead of going out to buy them; booking an Uber/Ola to reach your destination instead of changing 2–3 local buses; living in a society nearer to school/park/gym, etc.
You are okay with hiring professional advisors instead of spending time researching and figuring it out yourself. Financial advisor, nutrition coach, travel planner, etc., might be some expenses you start considering.
Change 7: Pursuit of Passive Income
By mid-career, you face some career ups and downs. A layoff, downsizing, or forced exit from a company gives you a reality check.
You realise that upskilling is the minimum requirement to be relevant in the job market. The uncertainty of a steady salaried income crosses your mind more than once.
Result: you start seeking ways to have a stable passive income source. You do not want to withdraw from your equity investments and disrupt the compounding wealth journey you started.
Passive income can come from part-time gigs, freelancing, or weekend consulting. You have enough experience to consult on career growth and your niche work area.
You discover passive income-generating investment instruments. Gold, Investment Trusts (REITs, INVITs), and high dividend yield stocks catch your attention. Stable, recurring, and inflation-beating investment assets become your new favourite.
Change 8: Retirement Planning Begins
In our generation, there are no life-long jobs. Private companies mostly employ people until their 40s or early 50s. Unlike our parent’s generation, where public sector jobs were the norm and people used to work there until retiring at age 60, for us privately employed folks, retirement might lurk around sooner rather than later.
You start seeing retirement on the horizon, and the preparations begin. Typically, the first step is determining how much time you have left and how much retirement corpus you would need.
Part of your investment starts going into a retirement corpus. Government retirement schemes like the National Pensions Scheme (NPS) and the Public Provident Fund (PPF) catch your attention. These safe, stable, and tax-free investments do have their allure.
With 15–20 years to compound your wealth in equities, you start looking for stable low-to-medium-risk investments. Diversifying also takes centre stage. Global and Indian equity investing via ETFs, Index Funds, and Mutual Funds becomes a plan.
Your investing discipline strengthens. Investing comes before spending. Savings also increase as you need emergency cash for a rainy day, and try to be as low on credit as possible for as long as possible.
Change 9: Wealth ≠ Money; Wealth = Health/Happiness/Family
The realisation of true wealth dawns differently on each of us. Once your basic needs are fulfilled, you introspect deeper to understand what true wealth means to you.
Once you do not have to worry about food and shelter, and your hobbies, such as travel, horse-riding, gardening, etc., are also taken care of, what else will make you feel wealthy?
Most often, at this stage, it is the quality of time you spend. You spend quality time with your loved ones. If you are in the pink of health, you can move around, talk openly, eat freely, and travel even on one day’s notice. And if you do all of this, you will most likely feel something close to happiness.
You understand that once you achieve financial freedom (now or later in life), incremental money may not make a difference to your state.
Money as a goal starts losing importance, and money as a means starts gaining focus. You balance plans to blindly chase money with time to nurture and build healthy relationships and lifestyle habits.
Your relationship with money has changed and evolved to a more mature, balanced level.
Parting Thoughts
Money plays an important part in our lives. It is the means to buy things that help us survive, make us experience moments, and create opportunities for ourselves or others.
The relationship with money is ever-evolving, as our priorities and responsibilities change over time. Understanding this relationship is key to comprehending and planning towards the change.
Too much money can cause stress and unrealistic expectations from others and yourself.
Too little money might add to your stress when planning your lifestyle essentials for today and tomorrow.
The right balance that covers your needs and some parts of your wants might be the right amount you need to be in bliss.
How has your relationship with money changed in your 30s? Do share in the comments below.
