Top Financial Planning Tips – for 40’s.

Your hectic personal finances start at your 40s. If you are at 40s today, you’re most probably already married and have children. So, today we’ll be going to talk about the Top Financial Planning Tips – for 40’s. 

Your kids might be old enough to drive themselves or if you’re a late bloomer, your kids are probably below 10 years old by now. Either way, you’re at a time in your life when you’re putting your youth aside. And your focus is more on doing some more financial planning for your future and your family’s future.

A typical dilemma faced by people in their 40s is the need of saving for college tuition for their kids and putting money into a retirement account while saving money for the down payment of your dream house if you haven’t bought it yet by now.

Although some countries, like Denmark, have a free education and monthly allowances from the government (paid through taxes), we still save money for the kids to ensure that they will not need to borrow money as when they go to college/university. On the other hand, 15-20 years from now, the education system could be totally different from today.

The following Top Financial Planning Tips – for 40’s will help you to ensure more stable personal finances for the rest of your life.

Saving For Retirement As The Priority.

If you haven’t done automatic savings for your retirement during your 20s or 30s, then you need to do it now – you don’t have room for delays. At your 40s, you still have around 25-30years before your retirement age. 25-30years of savings for retirement will give you enough time to accumulate money and have a better financial situation when you retire.

Remember that you can invest more money in your retirement aside from your 401K and IRA. Your bank advisor can help you to decide which plans are best for your current finances.

Juggling Savings For College And Retirement.

It’s tempting to put retirement savings on hold in order to send your children to the best college education. But experts believe that this is a bad idea.

Here are the reasons why:

  • You/your children can avail a very affordable loan for college, but you can’t loan any money for retirement, and it’s difficult to make up for the lost time.
  • Working longer isn’t always an option – many people are forced to retire earlier than they planned due to health problems or company downsizing.
  • You can help your children to pay their student loans when you saved enough money when you retire.
  • You can refinance to a 15-year mortgage – Refinancing to a 15-year mortgage will give lower fixed interest rates but It will bind your fixed mortgage payments.
  • Simply make extra payments on your current mortgage. Paying extra to your current mortgage with an additional 1-month contribution, i.e. 13 months payments divided by 12 months will accelerate your payments, and you’re still free to adjust your contribution if your budget becomes a little bit tighter.

Max Out Your Earnings.

Nimble with technology, even if you don’t work for a high-tech company. There are a lot of online courses you can take to improve your digital and social media skills. There are even free courses and seminars on how to use social media for a variety of business purposes. Many local community colleges and university extension offices provide courses designed to enhance your digital skills.

You can also find YouTube videos on anything from computer coding to Adobe Photoshop. And don’t forget to check my #1 recommendation, if you wish to open your own online business and build a passive income without a huge investment.

Don’t focus on how much money you take home every week. May sure you create something that can add up your income passively. In addition, make sure you avail the advantage of employee benefits that could build wealth and contribution to your retirement security. Some companies offer retiree health benefits, pension and contribution match up to a health savings account.

Pay Off Debt.

Paying off your debt quickly will give more room for your personal finances. Make sure that your mortgage today has the lowest possible rate, so you can use your money wisely in some other things like college savings for your kids and paying off your debt. Focus on paying off debt with higher interest rates, such as credit cards. You can read more of my tips here on how you can become debt-free fast.

Accelerate Your Mortgage Payments.

A mortgage-free retirement is a great goal. Normally, your mortgage occupies the largest part of your budget. Eliminating mortgage before your retirement will provide you more financial freedom. And the great thing is, you’ll be secured with any market downturns.

After paying off your expensive debt, consider accelerating your mortgage payments. You can consider two different ways of doing that:

  • You can refinance to a 15-year mortgage – Refinancing to a 15-year mortgage will give lower fixed interest rates but It will bind your fixed mortgage payments. Make sure to shop for a better deal and refinance, as your credit score may have improved since you took it out. Today’s modern refinancing options are much more convenient and user-friendly than ever before.
  • Simply make extra payments on your current mortgage. Paying extra to your current mortgage with an additional 1-month contribution, i.e. 13 months payments divided by 12 months will accelerate your payments, and you’re still free to adjust your contribution if your budget becomes a little bit tighter.  Making an extra monthly payment each month on a 30-year mortgage would reduce the term of your loan by around four years.

Check Your Family’s Insurance & Your Will & Testament.

If you haven’t done it yet, make sure you have everything in place when it comes to your insurance- your property, car,  life and disability insurance, medical and dental insurance etc. These can save you a lot of money in case of unexpected circumstances.

Make sure that your will and testament is also updated – as a wrote more about this in my article for 30’s.

Related articles:

Top Five Financial Tips – For 60’s (Pre-Retirees MUST Aim For More Secure Retirement

Top Financial Tips – Catching Up for 50’s

Best Way To Manage Your Money at 30’s – 8 Steps

The Power Of Investing Early – 4 Tips For 20’s

Managing Money For Children – Should You Blame Or Reward Your Parents?

Remember, that not having a financial plan is actually just having a really bad plan. Every financial plan is very specific to the individual, but you should look at your income and set priorities for paying off debts and saving for different needs.

I hope you enjoyed this article – Top Financial Planning Tips -for 40’s. And that it has added up a little bit more of your financial literacy in balancing your hectic job, family, spending, and debts.

If you have any comment and question or more tips for 40’s, please feel free to write them below. Good luck to your journey to financial freedom and God bless.

8 Reply to “Top Financial Planning Tips – for 40’s.”

  1. Wow, I really need to get on the ball! I’m in my 40s now and my husband and I do have couple of things in place for our future, but definitely not enough. My kids are 11 and 13 and college time is creeping up on us closer and closer. It’s kind of a scary thought. Thank you for the kick in the butt!

    1. Hello Christina,
      I’m glad you liked the article and it pushes you to look closer to your personal finances.
      You still have plenty of time at your 40s. However, now you know that you should not delay anything to have a more secure financial situation in the future.
      Best Regards,
      Che

  2. Hi Che!

    What can I say, GREAT advice and seriously good guidance for those who have not started. I learned many of these lessons in my early years and as I approach my 60’s I can breath a sigh of relief knowing I will live a comfortable retirement. I will be sharing this post on my social media and to all my friends as a reminder to get started know with saving and investing and to pass these lessons onto your children.

    1. Hello there Steve,
      Thanks. I’m glad to know you have a very stable retirement plan.
      Sharing this post could help other people with their finances before it’s too late.
      I believe everyone deserves a decent retirement after many years of hard work.

      My best regards,
      Che

  3. These are great financial tips to keep you on track. I am in my late 40’s and dealing with all of these things, retirement, college and debt reduction. Your post is so helpful. I have decided that I will pay an additional mortgage payment a year because I love the concept of reducing my mortgage by 4-years! Thanks again for the tips.

    1. Hello there Heather,
      It’s great that you can relate to the article and it helped you to make an active decision with your mortgage.
      It’s always nice to get out of any debts, especially mortgages before you retire, so you can have more financial and time freedom during your retirement.
      Have a great day!

      My warmest regards,
      Che

  4. I feel that this article was written for me since I just turned 40 last month. One tip that struck me was Juggling Savings for College and Retirement. This is the most challenging part of our finances since we want to make sure our children will not struggle to go to college and at the same time, we want to save for retirement. I have 20-25 yrs left in my working life and glad to know this tip we can’t loan money for retirement and it’s difficult to make up the lost time. Very well said! Thanks!

    1. Hello there Ian,
      Thank you for stopping by.
      Yes, it’s indeed a common dilemma for every parent – Juggling college and retirement savings.
      Remember that you can always help your children to pay for the student loan and you deserve a decent life when you retire.
      My warmest regards,
      Che

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