You’re getting older, your financial position is anything but impressive and you can’t stop worrying about the future.
At this point in life, time feels like it is flying right past your eyes. It may be easy to get discouraged but don’t. You are not alone. This is something many adults are grappling with all over the world.
If you have a steady job chances are you are making much more than you did when you were in your 20’s. But if you’re still in a financial rut, this is your time to panic. Just kidding!
As you approach your 40’s it is time to get very serious with your finances if you want to enjoy the years ahead.
You have some important decisions to make and with the advice of financial experts, here are some of the things they agree you need to do as you approach this milestone.
i. Deal with your debts: If you have a huge debt, it can be a wealth killer and that is why you need to plan on how to tackle it before you hit 40. Review how much you owe and create a debt repayment plan. There are different ways you can choose to approach the payment plan.
You can decide to pay a huge chunk of money every month until you clear the mortgage, student loan or car payments. Or you can start by paying off the small debts first until you finish remaining with the biggest one to deal with. Pick a strategy that works best for you and stick to it until you finish.
ii. Increase your retirement: No matter which bills you have at hand, don’t do it at the expense of your retirement. This is the time to amp your retirement savings as time is rapidly running out.
The more the increase in your earnings the more you should contribute towards your retirement. If you didn’t have the resources to start in your 20’s, work out a plan on how you can stockpile at least three times your current salary.
That will be a good starting point if you want to enjoy your retirement.
iii. Have an emergency fund: If you have kids to take care of, this should come as a no brainer. Focus on building an emergency fund as soon as you can to avoid unexpected expenses that may show up at any time.
Set aside six months’ worth of living expenses that will help you cushion unplanned surprises like a job loss, natural disaster or illness.
This way, you will be able to meet those obligations without stress and getting into debt.
iv. Get insured: Again, if you have children and other dependents, you need to figure out a way of taking care of them if you die. Research on the best insurance policies and sign up for one. Considering you are approaching your peak earning years, draw out a 10-year plan. You may want to consider a disability and life insurance policy.
In the event a disability keeps you from working, the disability policy will act as a bridge to sustain your lifestyle. Life insurance on the other hand will cover those who rely on your income. If you have huge debts you may want to consider a policy that will also take care of that.
v. Save: Now that you’re probably earning more, you are spending more on things that make your life and that of your loved ones a little bit comfortable. And that is fine.
However, you may want to move that money into more secure investments and savings. Tweak some spending here and there to fund your saving account. This is more important as you will get to learn in the near future.Photo Credit: Getty