Turning 40 is an important milestone. If you’ve planned your finances well, this can be a great time to look back on your achievements. However, if you have been lax about your finances and retirement planning, turning 40 can cause you a great deal of stress. After all, you are running out of time to fix your past financial mistakes. In light of that, here are some financial decisions that you should consider making before you turn 40 to ensure your future is financially secured.
Pay Off Consumer Debt
Given that the average interest rate on credit cards is over 17 percent, it’s smart to pay off all your consumer debt before you turn 40. High-interest debts can eat into your disposable income and make it difficult for you to save. Ideally, by the time you turn 40, the only debt you should have is your mortgage.
Automate Your Savings and Investments
Automating your savings and investments will make it more difficult for you to spend money on unnecessary things. So, it’s a good idea to set up an automatic transfer for a certain sum of money to a high-interest savings account or brokerage account every month as soon as your paycheck is deposited.
Make the Most of Your Retirement Savings Accounts
Your 40s are a great time to maximize your retirement savings. So, ensure that you are making the maximum contributions possible to all your retirement accounts.
Enhance Your Insurance Coverage
Your current income is likely to be a lot higher than what it was when you first purchased your life insurance policy. So, make sure to assess your current financial situation and enhance the coverage accordingly.
Create an Emergency Fund
If you’ve had to pay off multiple credit card debts and loans over the years, it’s likely you don’t have substantial savings in your emergency fund. If this is the case, make sure to save up enough money for at least a year’s worth of expenses in your emergency fund.
In addition to the above-mentioned financial moves, you should also get your estate in order. Doing this is especially important if you have young children or family that is financially dependent on you.