40 or Older? You Can Still Whip Your Finances Into Shape
If you’ve recently celebrated the big 4-0, congratulations! For the next several decades, you’re going to get happier, and experience less stress. (At least that’s what the studies say!)
Of course, this does not exactly give you license to just sit back and take it easy. You’re about halfway through your working life, which means that you have half the time left to pull in the money that will sustain you for the rest of your life.
And, not to be pessimistic (although pessimism can be good for your finances), but that’s only true if you work until your intended retirement age. Unfortunately, a lot of people face early retirement—or can’t get hired at all in their later years, as one manager revealed to us.
But we’re here to talk about solutions, so we’ve rounded up the seven most common financial challenges facing people in the 40+ set. Our goal: ensure that your 80-year-old self can sit in a rocker and watch the clouds drift by.
1. If You’ve Been Avoiding Your Finances Entirely …
Think your financial situation is bad? Well, whatever you fear now is better than the situation you’ll face if you put this off for another year. So here’s how you can take action today:
- Review how much you have saved for retirement.
- Check your savings to determine just how many months you could fund basic expenses if you lost your job (we recommend at least six).
- Figure out if you’re in debt, and if so, how much you’ve accrued.
- Get your credit score via the steps in this checklist.
You can easily do the first three steps by connecting your accounts to our Money Center, which allows you to add up your assets (savings, investments, etc.) and liabilities (debts, loans, etc.), to determine your net worth, which you want to grow from this point forward.
And the key to healthy asset growth is simple: You need to stick to a budget, which will ensure that you spend less than you make, and save for the future. But how much, exactly, should you spend on dining out versus contributing to savings? The 50/20/30 Rule will tell you–and Money Center users will automatically be guided in how to set up their budget according to this rule.
2. If You’re Living Beyond Your Means …
Keeping up with the Joneses is a human tendency—not a personal failing. We’ve got an entire article on how to cure comparisonitis, but, in short:
- Forgive yourself.
- Pinpoint what you envy. It may not be your friend’s six-figure salary, but it could be her intrepid travels.
- Be grateful for what you already have.
If you’re in debt, use this checklist to get out—and make sure that you know the top debt mistakes. For some added inspiration, check out how these people got out of debt, whether it was $20,000 or $60,000.