After 20s will be my 40s. Well, you can never say that most of the tips in the 20s tips can be used again the age bracket of 40 but you’ll never know. Well, it’s just that, it will be not always that you will be able to use the same formula in a certain problem right? Although yes, you can use them but it cannot guarantee that it will succeed. It is just the same in the 40s.
If I am in my 40s, I could be considered either a late baby boomer or a member of Generation X. Either way I will be at a time in my life when I will be putting youth aside and should be doing some financial planning for my future and my family’s future.
Most problem faced by people in their 40s is the college tuition for their children. College, if you would know is a very expensive one. Aside from college, there will also be that retirement plan that you have always been planning. But don’t fret, financial experts can help you sort out where your savings should be going in your 40s. You can ask them for more advices and tips as they know much more. However, for basic tips, I can help you with that.
These financial planning tips can help people in their 40s to find balance in their hectic lives of spending and debt:
- Build up your cash reserves
Roy Laux, president of Synergy Financial Services in McKeesport, Pennsylvania, says the first step in any financial planning is to establish an emergency fund.
“You should have three to six months of your normal income in an account that’s safe and liquid,” Laux says. “You should also have in that account savings for planned expenses. For instance, if you know you need to replace your furnace in a few years, you should be setting aside money for that in your savings account.”
- Reduce your debt
If I do have a credit card debt, student loan debt or medical bills, my next priority should be to reduce and eventually eliminate that debt so that my income can be channelled into saving and investing for the future.
“If you have credit card debt, you need to work on paying that down as quickly as you can,” Corey says. “If you have student loan debt, then you should first look to see if it’s tax-deductible based on your tax bracket. If not, then you should pay that off as soon as possible, too.”
- Make out employee benefits
“In your 40s, you should at least be saving as much in your 401(k) as your employer matches,” Laux says. “Even if you weren’t making any profit on that investment, your money doubles just because of the employer match.”
- Make your own retirement plans
In addition to saving for retirement at work, Merrill Lynch’s Corey recommends making the maximum allowable contributions to a traditional individual retirement account or a Roth IRA, depending on your income.
- Save for college tuition
I begin a 529 college savings plan to reduce the amount me or a kids may have to borrow to attend college. Many state universities also offer a prepaid tuition plan that allows you to lock in tuition at current rates.
- Insure your family
“It’s important for people in their 40s to do an insurance-needs analysis,” Corey says. “Often, people in this age group need a lot of life insurance because they have young kids and day care costs that could be higher if one spouse passed away. It’s hard for a lot of people to have saved enough to take care of their family without life insurance if someone passes away.”
And these are how you should be able to plan the way you do things with your money when you are in your 40s. These are all just easy so I’m sure by the time you will turn 40, you will be able to follow these simple tips.