How to Get in Financial Shape in Your 40s
Once you reach your 40s, your time to save for your future is greatly diminished. Since you don't have as much time for your savings to grow as you did in your 20s, you may have to save more money in order to reach your financial goals. However, the investment principles that were true in your 20s are also true in your 40s. The most important thing you can do to get in financial shape in your 40s is to determine what your goals are, and then to establish a plan to reach them.
Other People Are Reading
Instructions
-
-
1
Set an investment objective. Depending on your personal financial situation, you may have very different goals from your friends and colleagues. To become financially fit, you must first chart a direction by setting financial goals. For example, you may have the objective of paying off your mortgage as rapidly as possible, then retiring early. Others may want to save as much as possible now in order to have a large retirement nest egg. Your strategy to financial fitness may vary based upon your goals.
-
2
Assess your financial situation. You can't chart a direction to a goal without knowing where you currently stand. No matter what your goals, if you have overwhelming current obligations you may have to satisfy those first. Without assessing your situation, you may not even know what you can afford. Write down your assets, liabilities and income so that you have concrete figures on which to base a financial plan.
-
-
3
Organize your financial house. The basis of any financial plan is record-keeping. Organization allows you to have ready access to any financial information you need. Additionally, organization allows you to keep on top of important events, such as when bills are due, when you should access your free annual credit report, and how you are progressing on your financial goals.
-
4
Make a plan. For most investors in their 40s, retirement should be a primary goal. Max out contributions to retirement plans in which you participate, such as 401k at work or your own personal IRA. Get a retirement projection calculator from a bank, financial services firm or online financial website to help you construct a monthly or annual savings plan so you can reach your retirement goals.
-
5
Pay down your debt. Every dollar you owe someone else is at least a dollar you will not have for your own retirement. With the added cost of compound interest, the money you owe creditors can be a major drain on your personal savings.
-
6
Never live beyond your means. If you have credit card debt, it may be a sign that you are spending more than you are earning. If you are trying to become financially fit and save for your future, you cannot achieve your goals by living beyond your means. After organizing your financial records and assessing your financial situation, you should be able to analyze if you are spending more than you earn. Make a realistic budget based on your actual income so you can properly allocate your resources towards your financial future. (see Reference 2)
-
1
