Money Moves to Make in Your 40s

Entering the middle of your life often means your financial priorities shift. You might be focusing more on saving for retirement, and you may need to care for your parents. When you are middle age, it can be harder to enter a new career to increase your income. It is also often harder to find another position in the same industry with a higher paycheck, so it’s important to be careful with the money you do have. Luckily, there are a few money moves you can make to combat these challenges.

Consider Your Kids’ Changing Needs

As your kids get older, they may start thinking about what they want to do after high school. Perhaps they want to start work, take a gap year, or go to college. Their decision will impact your finances as well. If they take a gap year, you may not be able to downsize as quickly as you had planned. On the other hand, if they join the military and move far away, you may be able to clear out their bedrooms.

If they are thinking about going to college, take some time to plan with them. You may wish to give them a start in life by helping them pay for their college education. There are plenty of ways you can do this, but one of the most common is by helping them take out a student loan. They’ll often find it harder to get approved if they must sign for it themselves, so cosigning on it can help them get better rates. If you want to know more, you can review a guide on everything you need to know about cosigning a student loan pros and cons to help with your decision.

Enjoy Your Money, But Don’t Let It Turn into Lifestyle Creep

If you have been careful with your money, you can reward yourself by allowing yourself to enjoy it. Take that trip you’ve been dreaming about or spring for that home remodel. Just make sure you don’t allow it to turn into lifestyle creep. Lifestyle creep happens when your expenses slowly increase to meet your income.

This might take the form of getting a fancier car than you need or eating out more often than you should. After you have met your financial goals for the month, see where you might be able to treat yourself a little. This might involve putting aside a little money each month for a family vacation or saving up for a new outfit. Treating yourself in this way allows you to enjoy your money while still being mindful about how you are spending it.

Look to Long-Term Care Insurance

You don’t want to ruin your progress toward your financial goals, so make sure you are prepared for whatever life might throw your way. Many older adults have found that long-term care, such as a nursing home or assisted living facility, costs more than they can comfortably afford. Insurance could cover your needs in the future, so investigate your available options. Perhaps your employer offers something as part of your benefits package, or maybe you can shop around on your own. Getting this mid-life instead of later can save you money on your premium.

Be Careful with Retirement Calculators

You can use retirement calculators to help you plan your retirement but do so carefully. Often, these calculators do not account for other issues, like how much return you will get on your investments and how taxes will impact your savings. When calculators collect more detailed information, you are more likely to get accurate information. If you decide to use calculators, consider using as many as you can to get a more accurate picture.

Look to Downsizing

If your kids are moving out of the home at this point in your life, this could be a good time to consider downsizing. You could sell your home and move into a smaller one, buy a townhouse, or relocate to a cheaper area. This can reduce utility bills, property taxes, and mortgage payments, which could give you enough money to put toward more important goals. As you consider a move, take some time to look through your other belongings. You may find you have accumulated many things over the years that you no longer need. Selling them may free up space in your home and help you determine how much space you really need at this point in your life.

Pay Attention to Your Emotional Health

Your emotional health and financial health are closely linked, and if you are struggling, it might be hard to tackle things with a clear enough mind. As you work to get your finances in order, ensure you are also taking care of your own needs. Take time to care for yourself each day, and don’t be afraid to take a step back if you need to clear your head.