Many people consider their 40s the most beautiful time in their life when they are at the peak of their career and have a happy family. However, if you do not prepare carefully and try your best to seize the opportunity, this period will go through very quickly before you realize it.
If you have had smart financial decisions in your 20s and 30s, you may have enjoyed your achievements in your 40s such as buying a car with cash, paying all debts, and even saving a lot for your retirement.
However, whether you are good at money management or not, you still have to pay attention to long-term goals in your 40s, despite how much you earn. In the following article, we will introduce to you the top 5 financial goals you should achieve by age 40 to have a comfortable life later on.
1. Saving for retirement
Emily Guy Birken – the author of “The 5 years before you retire” – gives some scared statistics:
- One-third of the American has $0 for their retirement
- 23% of them have less than $10,000 in their retiring funds
- For those who are in their 40s and 50s, 30% of them do not prepare for retirement and 21.9% of them save less than $10,000.
According to Emily Guy Birken, you should prepare and plan for your retirement as soon as possible and increase the amount of saving money because time and tide wait for no man. Ask yourself how you will live your life when you are old and sick without any saving pennies.
2. Spending money intelligently
This is one of the most effective ways to increase your retirement fund. Try applying these following methods to spend your money intelligently:
- Track your spending: You can write it down or use money management apps. You may be surprised by the amount of money you waste on fast food or online shopping. Besides, you should spend time reading bank statements, credit cards, and bills to avoid payment errors.
- Plan your budget: You should divide your salary into different parts, one for your necessities such as food, house, etc.; one for paying debts, one for emergencies, and one for saving accounts.
- Consider carefully before spending: Ask yourself whether it is necessary or not. If you are really in need of an object, try to find the cheapest way to own it. This way, you will gradually adjust your shopping habits.
You don’t need to give up all of your daily needs, you should only adjust it basing on your financial situation.
3. Preparing for emergencies
Most of us will have to face unexpected situations at some points such as being fired or seriously ill. Therefore, it is necessary to prepare finance for an emergency case. You should plan a fund which may ensure your life in at least 3 to 6 months, preferably 1 year.
4. Paying all debts
According to a report of the Federal Reserve System, the total consumer debt has reached $784 billion, the highest level since 2009. The debt, together with its interest rate, will limit your investment and saving opportunities; and most importantly, it makes you hard to achieve your financial goals. Personal finance expert Beverly Harzog – the author of “The Debt Escape Plan” – suggests us to:
- Converting loans into personal loans instead of consumer ones because the interest rate of consumer debts is higher than that of personal loans.
- Using APR credit card (Profit margin is 0% within the first 14 months)
5. Purchasing insurance
To prepare for bad cases, it is best to find a solution to protect your properties. Ideally, you should buy insurance when you are young and maintain it for 20 to 30 years. You should choose a non-withdrawal account to make sure you don’t use the saving money. Also, you can research different types of insurance because health care in the old age is much more complicated than what you can imagine.
You may be overwhelmed with many types of living expenses at the moment and think that saving for retirement is not an urgent problem. However, if you do not start saving when you are young and can earn a lot of money, what will you do to save when you become older and more flaccid? Time goes by very fast, so plan your future from now on if you want to live comfortably in your 40s.