By the time we reach our 40s, life can often be rather complicated. Many people are stuck between a rock and a hard place, with kids still at home and elderly parents needing increasing amounts of care. You may have left starting a family until very late, in which case your children are very small, or you could have teenagers about to fly the next. Either way it is an expensive business and if you are not careful, you won’t be in a good financial position by the time retirement looms large. So if this is you, here are a few tips to help you better plan your finances.
1. Pay Off Debts
Most people have at least some debt. Mortgages, car loans and credit cards are common, but by the time you hit your forties you need to make debt reduction a priority. Get to grips with what you owe and create a sensible plan to reduce your debts. If you have a lot on credit cards, look for cheaper deals, or use some savings to clear the debt. The aim of the game is to reach retirement debt free, so start working towards this goal.
2. Start Saving
Saving is good no matter what age you are at, but in your forties, it is critical, especially if you have a family to support. Most people don’t save anywhere near enough each month, so if you fall into that camp, look very closely at your outgoings and see where you can cut expenditure. Try and have at least three months’ worth of savings stashed away in a separate account, but if you can manage it, go for at least six months’ worth of savings for a rainy day.
3. Retirement Planning
Retirement is looming ever closer by the time you reach your forties, but you still have around 25 years of productive working life ahead of you, so make it count. Check out your retirement plan options and try and pay as much into your pot as you can reasonably afford. The bigger the contributions, the bigger the tax savings, but if you are not sure what your options are, check out JSF Financial or visit financial planners Los Angeles for professional advice.
4. Insurance Products
In your twenties and thirties you probably assumed you would live forever, but now you are a bit older, you know this is not true. However, you should still be healthy, so it is a good time to look at term life insurance products to provide for your family in the event something disastrous happens.
5. Put Aside Money for College Fees
If you have young children, you should look to start a savings plan to pay for their college tuition fees. There are many specialist savings plans on the market that are designed to provide a tax efficient vehicle, so take advice and open an account as soon as possible.
Financial planning is not the most exciting subject in the world, but any time you spend planning for the future is time well spent.