In my latest episode, I’m talking all thing financial benchmarking for your 40s and what’s the most important things to have in place (financally-speaking), such as…
✅ Focusing on developing a financially fit mindset, setting boundaries, and saying no to unnecessary expenses
✅ Having important conversations about wills, power of attorney, and insurance with your parents while ensuring your own planning is in order
✅ Teaching your kids about money through family discussions and savings goals
By prioritizing mindset, planning, and financial education, you’ll pave the way for a more secure future.
Discover the key milestones for financial success in your 40s by listening to THIS episode ➡️
Hey there, welcome back! Today, let’s discuss what you need to focus on and where you should be in your forties. Share this episode with someone who needs to hear this or use it as your own guide to get back on track. Whether you’re younger than 40 or older, this serves as a catch-up checklist that applies to everyone.
In my forties, I’ve realized the importance of certain milestones that should be accomplished during this period. As a financial planner, I often contemplate money more than the average person. Each day, my focus revolves around finances. While my education and professional experience as a certified financial planner have taught me a great deal, the most valuable lessons have come from personal experiences. That’s why I enjoy sharing my insights, even though my kids sometimes consider it too much information (TMI). Personal experiences are memorable and impactful when shared with others.
Now, let’s dive into the milestones that I believe are essential and should be addressed in your forties. The first milestone is developing a financially fit mindset. It’s crucial to ensure that our thoughts and attitudes towards money are logical and rational. Our mindset shapes our financial well-being, so dedicating time to work on it is vital. This includes eliminating feelings of shame, guilt, and making emotionally-driven financial decisions.
Another aspect of this milestone is learning to say no. It can be challenging, but setting boundaries and resisting the urge to make impulsive purchases or pursue new and unnecessary expenses is important. In my forties, I’ve encountered situations where friends invite me on last-minute trips or events that seem tempting. However, I’ve learned to evaluate these opportunities and ask myself if they align with my financial priorities. Taking a moment to check myself before making a decision has saved me from potential regret.
For instance, recently I was invited to a spontaneous trip to Vegas with a group of friends. Although it sounded fun and appealing, I considered the cost and its impact on my financial goals. I asked myself, “Is this how I want to allocate my money right now?” It’s crucial to assess whether the expenditure aligns with your values and if it will leave you feeling fulfilled. In this case, going to Vegas would have been an expensive endeavor that wouldn’t provide me with quality time with close friends. Additionally, I have pending expenses like fixing my cracked windshield and addressing car issues. Prioritizing my financial well-being and learning to say no has become a valuable practice.
Moving on to the next milestone in your forties: learning to enjoy life while avoiding lifestyle creep. Although you may have more disposable income at this stage, it’s important to remain focused on your long-term financial goals. Don’t compromise those goals by constantly upgrading your home or car. Once you’ve met your monthly financial objectives, consider setting aside additional funds for savings. Emergency savings should be a priority, with consistent contributions to this separate savings account. Life can throw unexpected challenges your way, and having a liquid cash reserve is essential.
In summary, your forties are a critical period for financial growth and stability. Focusing on developing a financially fit mindset, learning to say no when necessary, and avoiding lifestyle creep while prioritizing savings will set you up for a successful future. Remember, these milestones are relevant to everyone, regardless of age.
And you don’t want to rely on a line of credit or credit cards. You want to set yourself up for success by having a solid financial foundation. Even if you haven’t needed to tap into it yet, it’s important to have emergency savings in your fifties. Life can throw unexpected challenges your way, and you may find yourself dipping into those savings. So, it’s crucial to be prepared.
Now, let’s move on to the next milestone. In your forties, it’s the perfect time to have conversations with your parents about important matters such as wills and power of attorney. Use it as an icebreaker by mentioning that you’re redoing your own will or power of attorney. Ask if they have their affairs in order and know the whereabouts of their will. It’s also a reminder for you to ensure that you have your own will and power of attorney in place. Opening up these conversations can even lead to discussions about long-term care scenarios and burial preferences, although I understand that these topics can be challenging for some families. Starting the conversation now while everyone is healthy is essential.
Moving on, another tip I have for you is to regularly check your credit score. It’s important to know where you stand and if there are any signs of fraudulent activities. By subscribing to services that provide credit score monitoring, you can stay informed and address any suspicious activities promptly.
Now, let’s talk about teaching your kids about money. Don’t wait until it’s too late and have regrets about not discussing finances with them. Involve your kids in family meetings where you discuss savings goals for special occasions or holidays. Let them know that saving for these goals requires mindful spending and budgeting. This doesn’t mean revealing all the details of your financial situation, but rather getting them involved and helping them understand the importance of saving and responsible money management. Whether they receive money for birthdays or chores, it’s never too late to start teaching them about money.
Next on the checklist is saving in various accounts, such as your tax-free savings account, registered retirement savings plans (RRSPs), and pensions. Maximize your contributions to pensions and assess your life insurance needs while you’re still healthy and younger. Having a comprehensive financial plan is also crucial. If you haven’t already, consider seeking a certified financial planner who can help you create a financial plan tailored to your goals and needs. Start now and update it as necessary. Your financial plan will guide your decisions, including tax planning, for the next 10 years and help you prepare for upcoming expenses.
In summary, your forties are a crucial time to focus on several important milestones. By ensuring financial preparedness, having conversations about wills and power of attorney, monitoring your credit score, teaching your kids about money, saving in various accounts, and having a comprehensive financial plan, you’ll be setting yourself up for a more secure and successful future.
I came across an article a while back and jotted down a few key words from it. I carry a book with me, actually multiple books, each with just a few pages of scribbles, but I know where they all are. I found the note I took and wanted to share it with you because I really like it. Unfortunately, I can’t remember who said it, but here it is:
“Stop playing someone else’s game. Instead, define the game you want to play—the life you want, the values that will guide your decisions, what truly brings you joy—and find your edge to make it possible. If you don’t, you’ll end up playing by someone else’s rules.”
I found this quote to be quite impactful and thought it would be a good kick in the pants for you in your forties. So, my takeaway for you today is to just get started and meet with a Certified Financial Planner. Get it done and stop playing someone else’s game.
That’s all for today. If you have any questions, feel free to reach out to me at [email protected]. Take care!