Planning for your financial future is something that you should do whether you are twenty or sixty. At every stage of life, you have different financial goals. Younger people are in the most advantageous position because they have time on their side. If they make a few mistakes with how they invest or allocate their money, they can recover. At the other end of the spectrum, if you are approaching retirement age, you have far less time to recover from a bad financial decision.
Those in their 40s are usually in a good position to take control of their financial future. You are usually in the prime earning years of your career. The kids are probably in college or out on their own. Your mortgage may almost be paid off and you have freedom to do with your money what you please.
No matter what your income level, there are a number of things you can do to improve your financial future. Following are some of the best money moves for people in their 40s.
Get Rid of Credit Card Debt
Why are you carrying $10,000 in credit card debt? It is very easy to get in the habit of using your credit card anytime you see something you like and want. If you can not pay off the balance on your credit card in two or three months, you should take that all of your credit cards out of your wallet and not use them again until you pay down the debt you have accumulated.
Even if you have a high income and can pay the minimums or a little more each month, you are still being charged an enormous amount of interest. If you eliminated that debt, you could bank the $100 or $200 you pay every month in interest.
Fund Your Retirement Account to the Maximum Amount Allowed by Law
While you are in your 40s, you should really start to think about building up your savings for retirement. You still have a good twenty years to use the power of compounding to grow your 401K or Roth IRA. Make sensible investments that reduce your risk. While you still want growth, you also need to protect yourself against a big market correction that can wipe out all of your hard-earned gains. The best strategy is to develop a balanced and diversified portfolio.
Consider Moving to a More Affordable House
This is a particularly smart move if you no longer need as much space as you once did when you had your children living with you. So called empty nesters do not need a 3,000 square foot house with four or five bedrooms. Yes, it can be nice to have extra space, but you will pay more for everything to maintain that house. By moving to a smaller, less expensive place, you will cut your electric bill, save on property taxes and also have an easier time cleaning and maintaining your property.
Gold and Silver
Almost all of the experts that study the commodities market agree that gold or silver will appreciate in price over the next ten to twenty years. Putting some of your investment dollars is a good way to diversify your portfolio and also add to your wealth. While gold and silver may fluctuate up and down in the short term, over time, it is very likely to appreciate significantly.
Buy a Long-Term Care Insurance Policy
Most people in their 40s do not think about the possibility of becoming disabled or incapacitated and requiring long-term medical or nursing care. While you are still relatively young, you can buy an affordable policy that will protect you when you are in your 70s or 80s.