6 money moves to make before you turn 40

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Try to check off all of these items on your list before this step arrives.


Key points

  • It’s a good idea to get your finances in order before you turn 40.
  • Building savings, planning for retirement, and paying off debt can help you focus on securing a financially stable future.

They may say 40 is the new 30, but aiming to be in a financially strong position by your 40th birthday is always a good idea. Here are some key steps to take in time for this important milestone.

1. Have a fully loaded emergency fund

An emergency fund is something you need at any stage of life. But you absolutely must do your best to have enough money in your savings account within 40 years to pay three to six months of essential bills. By the time you hit 40, you might have a lot of expenses, like a mortgage and car payment. You therefore need protection in the event of job loss. You also need cash reserves in case of unexpected bills that your paycheck can’t cover.

2. Get rid of credit card debt

The longer you carry credit card debt, the more it will cost you in interest. But also, as you get older, you might want to focus on different goals, like building a nest egg and sending your kids to college. And if too much of your income is taken up by debt, these goals can be difficult to achieve. That’s why it’s a great idea to get rid of your credit card debt by age 40, if possible. And if you consolidate your debt through a balance transfer or a personal loan, that debt could be easier and cheaper to pay off.

3. Start funding a retirement plan

You’ll need independent savings to comfortably manage your bills once you retire, and the sooner you start saving money in an IRA or 401(k) plan, the more opportunity you’ll have to invest that money. and to make it grow in greater sum over time. At 40, it’s wise to have at least the start of a nest egg, even if your savings still need work.

4. Get life insurance

If you have people in your life who depend on you financially, it’s important to get a life insurance policy. The younger people are when they apply, the more likely they are to benefit from an attractive premium rate. So it pays to do some research and start collecting quotes before you turn 40.

5. Create a Will

Although 40 is relatively young, you are never too young to write a will. Without it, you won’t have a say in what happens to your assets once you die. If you have children, it’s especially important to have a will that sets out a contingency plan for their care. The same is true if you have pets.

6. Improve your credit score

You never know when you might need to take out a loan or refinance your mortgage. And the higher your credit score, the easier it will be for you to borrow at an affordable rate. If your credit score needs work, you can improve it by paying all your bills on time, eliminating some of your credit card debt, and maintaining long-standing credit accounts (like the credit card you you have held for 15 years). open.

Whether or not you’re excited about turning 40, the last thing you need at this point in life is financial stress. Check these items off your list before your 40th birthday and you’ll have even more reason to celebrate.

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