It’s said life begins in our 40s, but while this is the decade of apparently living it up it’s also the decade where we get to cement the foundation of our financial futures.

Here’s 6 mistakes to avoid in your 40s to ensure you are financially on track for your later years.

 

Lifestyle expenses getting out of control

 

In our midlife earning years, it’s easy to sink into that comfort zone where our lifestyle choices stealthily keep taking up a little bit more of our paycheck.

It’s important to enjoy life but just as important to also regularly increase our contributions to our investment accounts so that we can continue to enjoy our comfortable lifestyle in our later years.

 

Investing too conservatively

 

Age brings the benefit of experience as well as the resulting risk aversion.

We tend to extend this conservatism to our investment choices resulting in us not using these pivotal years to build a sufficient nest egg.

If you are around 45 you likely have another 40 to 45 years ahead of you including a good 20 before retirement.

It’s important to keep your investments “juicy” enough to build wealth in this period.

 

Thinking it’s too late to save for retirement

 

The best time to start saving for retirement was yesterday. The second best time is today.

If you haven’t started now is the time to act. Start putting as much as you can afford into a pension and plan for ways to grow that contribution.

 

Raiding retirement funds to pay for kids

 

Our kid’s education and financial security are incredibly important but by focusing on their financial futures and neglecting our own we may counterintuitively be setting ourselves up to potentially become a burden to them in the future in any event.

 

Think big picture and prioritise your financial wellbeing. If the kids are driven enough, they will find their own way to gaining the education they want and this experience, coupled with us being financially sound, could turn out to be the best gift we have ever given them.

 

Neglecting personal insurance

 

In your 40s, you and your ability to earn income is the biggest asset you and your family have,

It’s important that you safeguard this and that means having the necessary personal insurances, such as disability, critical illness insurance and life insurance if you have dependents.

 

Delaying estate planning

 

Do your family a favour and get your estate in order.

Draft a will, confirm your Power of Attorney and visit a Financial Planner to ensure all will flow seamlessly and tax efficiently to your dependents.

The 40s are a great decade to get your financial house in order. Use them wisely and build the gold into your golden years.


Take the Financial Intelligence Quiz to see how prepared you are for creating a comfortable lifestyle for your future self.

Hey there!

Michelle here,

You want to become financially independent and grow your wealth?

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I help women build their financial intelligence. This means we talk money, earning it, saving it, investing it and growing it.

 

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