Financial tips for the 40s

Being in your 40s is a time when you need to focus on your family’s future and plan yourself. The dilemma with this age bracket is that you need to be spending on your kids’ college fees and still save for your retirement. This can get quite overwhelming especially if you’ve got other side plans like buying a house or settling a loan payment. However, it doesn’t have to be that hard and you don’t need an accountant to help you manage your money. Here are some expert tips to help you through.

Build your cash reserves

You need to be prepared for the worst and build your cash reserves in advance. Create a separate account that you can use as an emergency fund and stock it with up to six months of your income. You can use the same account for planned expenses or create a separate one for these. Make predictions about your home’s upkeep. For instance, you may need to replace your furnace in a year or two so plan for them in advance. You should also be ready in case your house tumbles down or if you get fired.

Clear your debts

Debt can really weigh you down especially credit card and student loan debts. They reduce your savings and can increment to huge amounts in a short time spans when not controlled. If it’s a student debt that is not tax deductible, you should pay it off as fast as you can. If paying off the debts doesn’t seem too easy, then search for lower interest rates for your credit cards. Reduce these rates gradually and if you can, use a third of your savings to clear them off.

Take advantage of your employer’s retirement plan

You need to be more aggressive in your 40s and max out on your employer’s retirement plans. Make contributions in your retirement account and you will have major gains because taxes on earnings are deferred. As a bonus, your employer matches the investments which can lead to your money doubling up. So ensure you clearly understand the kind of retirement plan offered by your employee and do your best to take advantage of it.

Insure your family

At this time in life, you need to insure your family because of the young kids and daily costs that could cripple the family if you pass away. Ensure you check that you are having the right coverage because people usually realise they aren’t properly covered after a disaster.