Financial Planning - You are in 40's
Business
- On Feb 20, 2025
- By Avinash Kumar
Financial Planning - You are in 40's
It is time to take a pause and rethink what you have done earlier and what you were willing to do. In our early professional life, the attitude and sprit was high. We focus on what we wanted to do. But as life progresses, we get too busy in our present life- trying to manage office work and family, people do not plan too much for our future. We realize only when we get a hit by bad times in our life, which could be either health problems, jobs loss or any other reason that brings instability in our life, we realize that we haven’t planned well for our future and we become restless, as we have family to take care-of, along with the money that we need for our retirement and monthly expenses. Whatever is the reason, job loss, instability in profession, personal reasons?
Cool down cool down, still we have not lost all our time if you sit and rethink, a lot still can be done for the future and it should be on top of our mind. You are heading into your peak earning years, but your time horizon is shrinking. As your expenses and commitments mount, budgeting becomes more important. You are probably still paying off your commitments, and you have to cover family related costs for the future when you are not supposed to work, I mean your retired life:
Points to Rethink:
If you have dependents, life cover is vital and it should be 10-20 times of your annual income.
Saving for your children’s education is a priority
Don’t forget to build your retirement corpus, you can’t be dependent on your children in your old days.
Your WILL needs to be reviewed regularly to ensure your estate planning is up to date, and takes into account life changes such as marriage, children, divorce and changes to your assets and investments.
A health plan apart from you corporate world is important for bad times.
Saving and investing in your 40's
Short and medium Term Savings.
Set up an emergency fund and aim to have at least three months of expenses covered.
Saving Accounts
Tax Free Savings Accounts
Unit linked investments
Review your saving for education, as increase in education prices are often higher than average inflation
Long Term investment:
If you haven’t begun saving for your retirement, start immediately.
There are at least 20 years and limited amount of pay cheques until retirement at 60.
Use all bonuses you receive to boost your retirement savings.
If you are financial graduate then its fine, otherwise take advice of any Financial Expert. Consider additional property investment
Insurance in your 40's:
In addition to medical and disability cover, life cover is critical in ensuring your loved ones and dependents should be covered, you cannot be around enough to look after them.
If you are a home owner, building and household content cover should be a priority.
Health cover is an important addition to these policies.
In my 20's I thought I knew what I was doing.
In my 30's I would do anything to make money.
In my 40's I only do what I love doing.
You find what you love by going back to what you loved in your twenties and keeping expectations low.
It will be an excellent opportunity to find out where we made mistake in the past and it is a good time to rectify it.