How to manage money in your forties

How to manage money in your forties

Your forties are probably the time in your life when you’re working incredibly hard and earning more than you ever have. You’ve climbed up the career ladder, made your way into a management position and are much better off financially than you were in your twenties.

But to ensure a smooth transition into your fifties and retirement, you need to be careful about how you spend and save now. Otherwise you won’t have much in your retirement accounts. It’s unlikely you’ll want to be working when you’re 65, so these are the years to make significant progress toward your future plans.

We’ve already covered how to manage your money in your thirties. That decade was all about getting a handle on your finances, figuring out how to manage your income and making sure your bills are all paid. Your thirties were the time to create automatic debit orders for all your bills and expenses, saving up for life’s inevitable emergencies, making a plan for retirement and investing in your future.

If your thirties were all about putting those important processes in place, your forties are about cementing them. This is the decade for your to start putting your finances on autopilot more than ever before. These tips can help you do just that.

Think carefully about your housing

Now is not the time to go bigger. If your bond is fully paid off and you’re in a good position financially, stay where you are. But if you’re in need of cash to pay off debts, it might be an idea to sell your home, buy something a lot smaller and use the difference to pay those bills. In addition, you utilities and other monthly expenses will be lower, so you can put this money toward debts too.

Invest aggressively

You still have time before retirement to invest fairly aggressively. In the five years or so before retirement, you’ll want to move your money to less aggressive investments. But now is the time to take advantage of the bigger possible increases in aggressive investing.

Put your own retirement ahead of college funds

If you’ve been saving toward your children’s education funds instead of your own retirement, now is the time to focus on yourself. Your children can find other ways to fund their education. But there is no one who can help pay for your retirement.

Prioritise retirement saving

As much of your money as possible should be going into retirement accounts at this point. Do research about tax allowances and try to save the maximum amount possible. Consider your entire asset management plan and make any changes necessary to intensify your savings. Your future self will thank you.

Start thinking about a side hustle

Many retirees aren’t able to support themselves in retirement. The majority have to work another job or start a business in order to pay their bills. If you are concerned about having sufficient savings at retirement, now it the time to come up with a business idea or hone a skill which could be used to pay the bills.

Ensure your family is cared for

Do you have a will which clearly outlines who is entitled to your estate? Now is the time to ensure you have this important document stored safely somewhere. In addition, do you have life and disability insurance should the worst happen to you? Have you considered what may happen to your family if you weren’t able to work and earn an income. These aren’t positive thoughts, but you will feel better after making sure your loved ones are looked after.

The finish line is in sight, you’re more than halfway there. Take some time to think very carefully about the next few decades of your life because your retirement will be here before you know it.

Authored by: Pete Anderson

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