10 Ways to Take Charge of Your Financial Future in Your 30s and 40s

10 Ways to Take Charge of Your Financial Future in Your 30s and 40s

In most cases your 30s and 40s are the prime of your life.

Chances are you’re killing it in your career, likely earning more than ever before, expanding your family, and may even be living in your white-picket-fence dream home.

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But with success comes greater financial responsibilities. You probably have a mortgage, credit card bills and after-school activities to worry about—plus your kids' college education and your own nest egg.

All of this can make the idea of financial security seem like a pipe dream.

But take heart. We've whittled down a potentially long list of money moves to make in your 30s and 40s into five manageable—but impactful—to-dos for each decade.

Not only will they help you take your household finances by the reins—but they'll also give you the kick start you may need to adequately plan for your future.

RELATED: Want to Boost Your Money Confidence? 3 Moves to Consider Making in Your 20s, 30s, 40s and 50s

5 Ways to Take Charge in Your 30s

1. Get Serious About Unsecured Debt

Unsecured debt, which isn't backed by an asset like a house, usually carries the highest interest rates—and it can snowball in your 30s, says Chad Nehring, a CFP® with Conceptual Advisors in Appleton, Wis.

And this is usually due to the fact that many people turn to credit cards—the most common form of unsecured debt—to help finance costs for a growing household. “And most of the stuff that goes on credit cards are wants, not needs,” Nehring says.

If you're in this scenario, itemize your unsecured debt by interest rate, so you have a clear picture of how much you owe, suggests Nehring.

Then come up with a plan for paying them off, ideally within five years. One of the most common methods is to tackle the highest-interest debt first, while still paying the minimum on your other cards and loans.

RELATED: How I Finally Paid Off a Lifetime of Credit Card Debt

2. Protect Your Income

As your family grows, so does the need to secure your income in the event of your death or disability.

And if you're the type who thinks, "It won't happen to me," think again. According to the Council for Disability Awareness, a healthy, 35-year-old female has a 24% chance of becoming disabled for at least three months sometime during her career, while her male counterpart has a 21% chance.

So if your employer offers disability insurance, consider taking advantage of it, since the company likely gets a discount for group coverage, Nehring says. But if you have to get a private plan, and need to keep your premiums low, consider a policy that pays out benefits for two years—the minimum period typically offered by insurers for long-term disability policies.

Life insurance, meanwhile, might be better purchased privately, since employer-based policies tend to be limited—plus, they may not be portable if you leave your job.

Aim for a policy that's large enough to cover your net income until your youngest child turns 18 or until the surviving spouse reaches retirement age, along with major debts like a mortgage, credit cards and outstanding student loans.

Schedule a money talk twice a month, in which both of you bring agenda items. The goal: Designate actionable to-dos each person can tackle.

3. Start a College Fund

For the 2014–2015 school year, tuition, fees, and room and board surpassed $42,000 a year for a private college, according to The College Board.

Now imagine how expensive it will be by the time your little ones are ready to leave the nest.

If you have young children, alleviate some of that stress by starting a college fund, such as a 529 plan, says Susan Bross, a San Francisco–based financial counselor. To get started, Bross suggests checking out a site like savingforcollege.com, which helps you compare different state-sponsored 529 plans.

And don’t be afraid to get relatives involved—small monthly gifts from grandparents, or that annual birthday check from an aunt, will compound over time. “The best baby gift you can get is to have family members contribute to education,” Bross says.

RELATED: New Year, New 529 Rules: What You Need to Know

4. Schedule Regular Money Talks

During the honeymoon period of a relationship, managing joint finances is usually the last—not to mention least romantic—thing on your mind.

But once you tie the knot, it can often become a source of friction: A 2014 Money magazine poll found that 70% of married couples fight about money.

So as the mortgage, car payments and school costs balloon, it’s important to be on the same financial page. “Continue to practice communication and transparency in your relationship—even as things get more complex,” Bross says.

You can do this by scheduling a money talk twice a month, in which both of you bring agenda items, such as filing taxes or renewing an insurance premium. The goal: Designate actionable to-dos each person can tackle, like calling your accountant or insurance agent.

5. Build Your Financial ‘Dream Team’

Few people can go it totally alone when it comes to managing your finances, especially if you've transitioned from a single- to double-income household. So cull a group of professionals who can help guide—and grow—with you.

Your team could include a financial planner, who can help you meet short- and long-term money goals; an accountant who understands your evolving tax situation; and an attorney who can work with you on an estate plan.

As you weigh who to partner with, inquire about their credentials, how long they've been in business, and whether they can share any client success stories.

“These are people you will ideally have in your corner for quite a while," says Bross, "so you want to make sure that they are good at imparting the information you need."

RELATED: 5 Confidence-Boosting Money Mentors to Have in Your Financial Corner

5 Ways to Take Charge in Your 40s

1. Expand Your Estate Plan

By your 40s you may have already made moves to help ensure your money goes to your loved ones after your death by naming payable-on-death or transfer-on-death beneficiaries on your bank, investment and retirement accounts.

But if you haven’t yet put thought into an estate plan, you may want to get started. Your family has likely grown over the past decade—along with your assets—which is why it’s important to set up both an advance directive and last will and testament.

An advance directive enables you to choose your health care proxy, as well as set up a living will that spells out your end-of-life care. The last will and testament takes care of post-death decisions, such as how you want to divvy up your assets, and who will take care of any minor children.

If your assets aren’t so large as to trigger an estate tax, Nehring says you may be able to stick to a simple will, which covers the basics of doling out your assets, guardianship for your children and naming an executor for your will.

RELATED: Covering Your Assets: 7 Common Estate Planning Mistakes People Make

2. Discuss Money Values with Your Kids

“In your 40s you may have preteens who are looking at what their friends are doing and spending [their money on],” Nehring says. “This is an opportunity to give your children lessons as they relate to finance.”

Translation: As your kids start to understand the value of a dollar—and what it can buy for them—figure out how you want to convey your beliefs about earning, spending and saving.

For his kids, Nehring employs a "matching dollars" program. “They get money for helping out around the house, and if they choose to save it, I match them dollar for dollar,” he says. “They figured out quickly to do a lot more saving.”

Bross, meanwhile, suggests including your kids in after-school activity decision-making. “A lot of times parents will have kids in lots of activities, which can be costly—and the kids aren’t necessarily enjoying them,” she says. “You want to get them involved in making choices for their lifestyle.”

In our 30s we have a real tendency to spend to show off or satisfy desires. In our 40s we may start to look at life a bit more simplistically.

3. Start Eldercare Research

As a member of the Sandwich Generation—the group that has to juggle the financial responsibilities of their aging parents and children—you're likely dealing with your parents’ eldercare issues, which may lead you to think about your own needs in the future.

In this decade it's a good idea to look into what will and won’t be covered by Medicare—long-term care and most dental care isn’t—and determine if you'll want to stay in your home or move to an assisted-living facility.

While you’ll have to adjust for inflation, local agencies may be able to help you estimate how much long-term-care facilities and in-home aides cost in your state.

“In Wisconsin, where I live, each county has what are called Aging and Disability Resource Centers, which are government agencies designed to give education on such issues,” Nehring says.

It may also make sense to start looking into long-term-care insurance now, since you're more likely to qualify for a policy and your premiums will be cheaper while you’re young and healthy.

RELATED: Longevity Will Cost You: Why Healthy Lifespans Mean Sticker Shock for Women

4. Max Out Your Retirement Savings

This move is not only good for your nest egg, but it may also help lower your tax liability during a time when you need it most.

“In your 40s your income may have increased to the point where taking advantage of every tax savings opportunity is going to be essential,” Nehring says.

He likes the idea of maxing out your 401(k) first, since it has the highest allowable contributions ($18,000 in 2015 for those under age 50), and because you can potentially take advantage of an employer match. “Changes in 401(k) laws also now have most employers adding many more diversified, low-cost investment choices to their plans,” he adds.

If you’re already maxing out your 401(k) and an IRA, there’s also the option to save through a non-retirement investment account, says Nehring—as long as you stay focused on the long term.

“An investor here should be mindful of frequent trading, as it may cause unwanted capital gains taxes, negating some of the benefit,” he says.

5. Get Your Lifestyle Spending in Check

While you’re likely making more in your 40s than ever before, that doesn’t mean your spending has to bump up in proportion.

“[At this age], there’s a tendency to say, ‘Hey, I made it out of the tough years, and now it’s time to spend,’ ” Nehring says, adding that this is usually when the luxury items start appearing—tech gadgets, souped-up cars and even boats.

But rather than continue down the path of lifestyle inflation, consider doing a “spending makeover,” suggests Nehring, by looking at your monthly budget to see if your spending is still in line with your financial priorities.

Spending tweaks could be as minor as cutting out hardly used subscription services or getting rid of the extra car your family no longer needs—and as large as downsizing your home, if you want to lower your monthly mortgage payment.

“Just because your balance looks healthy doesn't give you license to spend,” Nehring says. "In our 30s we have a real tendency to spend to show off or satisfy desires. In our 40s we may start to look at life a bit more simplistically.”

RELATED: More Money, More Problems? The Dangers of Lifestyle Inflation—and How to Avoid It

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

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