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Financial moves to make before you turn 40


Putting off important financial decisions can have a major impact not only on your retirement but also on your financial well-being as you move towards retirement.  Having a strong foundation built by the time you are 40 can produce so many benefits not just in retirement but in the years leading up to retirement.
 
Why is 40 such an important milestone for having these moves completed?
For most of us, 40 is when we really become most heavily burdened with financial responsibilities and these moves can help make those burdens easier.  Plus, getting these moves made by 40 still leaves of valuable time to help reap the greatest impact from these financial decisions.
 
What are a few basics to get done right away?
Cleaning up your credit if you have credit problems and reducing your credit card debt are two foundational steps that needed to be done as soon as possible.  The third step is to develop good spending habits and stop spending all or even more than you earn.  A functional spending plan also helps prevent a recurrence of bad credit and high credit card debt.
 
After we have built this foundation, what is the next move?
Build your savings habit.  Start by automating your retirement savings with the goal of getting to 10% of your monthly income going to retirement savings as quickly as possible. Also, while getting your retirement savings going, one really needs to build an emergency savings fund of 6 months or more of expenses as quickly as possible.
 
What should we explore after getting these basics completed?
With all of these basics completed, now is the time to start thinking about buying a house and investing in other more complex investment opportunities to expand your net worth.  Gaining a knowledge of investing basics and a more in depth understanding of taxes is also important to have before one turns 40.
 
What are a couple of key strategies to accomplish before one turns 40 if they have children?
Two of the most important include having the right amount of life and disability insurance for your situation and compiling a will and other estate planning documents.  This planning is critically important for everyone and if you have children, it is only elevated in its level of importance.
 
Is there anything else you would suggest before one turns 40?
There are a few other moves that can be made but probably one of the most beneficial moves is to select and work with a financial advisor. One important aspect of long term financial success is having an advisor who can work with you over a long time horizon to build, monitor and adjust your financial plan.


Posted: 10/15/2015 with 0 comments

Categories: Financial, Money Matters, Planning



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