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In your 40s, you should learn these financial planning tips

Updated on July 12, 2016

There are several smart financial tips that people in their 40s can practice. These tips will work regardless of your marital status. It is not too late for you to use these financial planning tips and retirement planning tips if you are in your 40s. However, you must develop a step-by-step plan that will eliminate debt and then you must invest for retirement. Why is this information important if you are in your 40s? Social Security may not be available when you decide to retire.

Whenever you hear reporters speak about the “Generation X” or the “late baby boomers,” they are referring to persons in their 40s. Use these financial tips and strategies to help you plan for the future and for your retirement.

Start emergency fund

Make sure you start an emergency fund. You should establish an immediate emergency fund with at least $1,000 in a checking or saving account. The funds will be used for unexpected expenses. For example, you might need to pay for car repairs or home repairs. Unforeseen expenses can happen at any time and this fund is used to cover those expenses.

Create a budget

You must create a budget. Find the billing statements for all of your bills. Pay off the smallest bills first and then attack the larger bills later. Do not worry about interest rates. Try to keep bills current. Avoid using credit cards and do not borrow any money. Spend your money only on the things you need. Stay out of the restaurants and shopping malls unless you work there. Make sure you check your credit report and clear up inaccurate information.

Reduce debt

In your 40s, you must be able to reduce your debt and increase your income. The process is not difficult and you must stay focused. You can reduce debt by getting rid of expensive cell phone plans and smart phone plans. It may be a good idea to cancel cable and other unnecessary subscriptions. Use your negotiating skills to work out lower payment plans with all creditors if possible.

Increase income

While you are reducing your debt, you should also be increasing your income. This is the formula that will help you to become debt free. How can you increase your income? You can start a second job. Also, you can find work on the Internet and work from home. There are also mystery shopping companies that offer part-time jobs. Think about which skills you have that can be used to help you increase your income.

Invest your money

If you are in your 40s, it is very important that you learn how to invest your money. Remember that Social Security might not be available when you retire. Therefore, it is up to you to make wise financial decisions for you and your family. If the company you work for offers a 401K plan, invest as much as you can in that plan. Study the plan to find out how much money you will have when you retire. Read this article on “How to Become a Wise Investor.”

Finally, the 40-something year old will also have to take into consideration insurance that is needed now and during retirement. You will probably need health insurance, life insurance, disability insurance, automobile insurance and home insurance. It is important to know that starting an emergency fund, creating a budget, and reducing debt, will help all 40-somethings retire successfully.

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    • jackclee lm profile image

      Jack Lee 13 months ago from Yorktown NY

      Great tips. The only thing I suggest is to start doing it in your 20s. Time is on your side. The early you start to save and plan, the easier it is to reach your goal. The rule of 72 applies.

    • lions44 profile image

      CJ Kelly 13 months ago from Auburn, WA

      Great tips. Already practicing most of them. Sharing everywhere.