Following up with this lifetime of savings series, we have talked about how to save money in your 20s and how to build solid foundations for your adult financial life, as well as the smart money moves one should make to save money in your 30s. Now let’s see what should be tackled in your 40s.
Make up for your 30s
Again, don’t beat yourself up. You can’t bring back the past, but now it is really, really important that you get on board with good financial habits. It may be a bit depressing seeing others achieving their goals while you barely get started, but it can be done. Pay off as much consumer debt as you can, as it is holding you back, then start planning for retirement. Your kids will always find a way to go to college if you can’t pay for it, whereas no one will pay for your retirement. Well, unless the kid you sent to college turns out to be a money making genius able to support his parents and his growing family in his mid 20s. Odds are slim, so choose retirement.
Upgrade your house
I am not saying buy a multi million mansion you can’t afford, far from it. But you are still robust and thinking straight, so you should make all the heavy work on your house while you still can, like replacing a roof or adding an extension for your teenage kid. Even maybe move to a bigger house. Remember it will only serve you until the kids go to college, which may be 10-15 years max, and you may end up with more house than you can care for, and too big a garden. Cramped quarters are hard for everyone, but it would only be for a few years. In any case, your house should be in great shape and well maintained or it will cost you a lot more down the road.
Prepare for sh*t
If nothing has happened so far, something will, guaranteed. You kid will break a leg, you’ll lose your job, the car will die, the roof will leak, maybe all at once. How will you pay for it? Sadly, the odds of you getting divorced are pretty scary too. Can you afford it?
Hence the importance of building a comfortable cushion of savings to weather the storms life will repeatedly throw at you.
Minimize your taxes
In your 40s, you are making the big bucks. And the taxman loves you for it. Instead of resiliently entering the higher tax bracket, seek advice and look for tax deductions. It can be a computer for your side business, a kid or daycare credit, a solar panel deduction… There are tons of credits and you don’t know them all, so it is usually worth a specialist’s fee to reduce your tax bill.
Define retirement
Now that you are a couple or a family, it is time to discuss finances with your partner. Set your long term goals, review and merge your budgets and your saving plans.
Money is often the reason for divorces and fights, so communication is key there. Sit down with the last bills and statements and see where you want to be in 5, 10 and 25 years.
Prepare your kids
Your kids should now be able to learn about money, and one of the best gift you can give them in life is to prepare them well for the financial world. Teaching them well will also help you save money over the next few years. If they know the value of things and the value of money, they should be less spoiled. They may even take a job to pay for their own stuff!
Another thing you need to talk to them about is how long you will keep on supporting them. My parents made it clear from age 12 or so that I would pay for college and be on my own at 18. I prepared for it, took a lot of jobs in high school and paid for my college without trouble. But if you don’t prepare your kid you can’t just kick him out on his 18th birthday.
Protect yourself
Those carefree days are over, now that someone else, and maybe little ones, depend on yourself and your income. It is time to think about life insurance, disability insurance, and of course, home insurance, both building and contents insurance. You should also review your healthcare plan to check conditions about maternity and prenatal care.
Invest for your kids
Your 30s are the time to stop thinking about you and start thinking about your kids. Did you know that if you save £1 a day from conception to college, you could make your kid a millionaire by the time he/she retires? Check the link for the exact math, but that is pretty cool. Your 30s are the time to start a college fund, a car fund, a whatever fund for your kids, so you can afford to kick them out of the house when they turn 18 🙂 just kidding.
Doing all this should help you keep building a solid ground to enter your 40s. See you next time to talk finances and saving money in your 30s.
What would you add to my list if you are over 30?
Thanks for the linkup, Pauline, and love this series!! One of my fave tips here is about preparing your kids – we do them a huge, huge favor by teaching them about personal finance and proper money management.
Yes, setting them up for life is one of the best gift you can give them.
Great list! You’ve pretty much got it covered! I am trying to do my 30’s right so I don’t have to make up for it in my 40’s.
best way to go!
Thanks for the mention, Pauline! I couldn’t agree more on the importance of teaching kids about money and setting clear expectations with them. So many parents don’t and kids think they parents will take care of them financially forever.
I still have friends in their 30s getting help from their parents to pay rent or a cell phone bill, it is pretty depressing. What you invest in your kids when they are young pays off tenfold over time.
I would have loved if my parents had invested for us when we were young and she was in her 40s, but there was no money for that. She did upgrade the house, though. She made a good real estate investment in her 20s that she cashed in on during her 40s. It served her well.
It is a tough choice when kids want fancy clothes and ipads to say no and invest for them instead, or if your budget is already tight just covering the basics. But the long term results are amazing.
Prepare for sh*t is really good advice haha!! Bc we all know it’s true!
Yep, sh*t happens!
That is no joke about wanting to kick your kids out at 18. Most of my siblings have grown children that are still living in the house after college. That is interesting to me because our mother told us the same thing your parents told you, you’re on your own at 18 kid! We made it ok.
My parents had a 50% success rate with me. My sister didn’t pay attention and stayed home until she moved with her husband.
I’m all about kicking the kids out of the house and having them find their own way 🙂 It’s the best way for them to learn and become independent, responsible adults!
It is tough, you want to protect them and have the best while at the same time let them be their independent selves, and the two don’t go very well together.
I love the point you made about teaching your kids about finances. It really is the best give you can give them. No one wants to depend on someone else. And you’re so right about setting yourself up for retirement first. I see way too many people with little saved for themselves and looking at working until they’re 70 or beyond, whether they want to or not. Great ideas, Pauline.
Britain is a rip off shithole. Wages are low for anyone with talent and costs extortionately high for poor quality. Incompetent corrupt governments have ruined the country and made it a toilet of Europe. Waste