5 Financial Milestones to Strive for by 40
by Ashley Feinstein, Contributing Writer
Article Sponsored by: J Dog Junk Removal
During your 40s you may be at the height of your career, which also means your highest earning years. While you are enjoying this success, temptation can be high to increase your lifestyle. There may also be more people depending on you for financial security. You might even feel pulled in many directions by various financial priorities. Not only do you have to worry about yourself and potentially your partner, you might be planning to or actually financing some dependents, investing in a home, and ramping up your retirement savings. While having various priorities can feel overwhelming, it’s important to focus on your most important goals in order to hit your financial milestones. With your current level of income, you can either make small movement toward many goals or big movement toward a few important goals. If you end up achieving those important financial goals ahead of schedule, you can always start prioritizing new goals. Here are five financial milestones to strive for by 40.
1) Create a rainy day fund.
First and foremost, I recommend that you stash away at least 3-6 months of expenses in an easy-to-access liquid account in case of the unexpected. Having this cushion will protect you from having to take on expensive credit card debt in the case of a surprise expense. In order to decide how much money to put away in your rainy day fund, you will want to think through a couple of emergency situations. How many months of expenses would make you feel comfortable in each situation? You will also want to determine how much money you would spend each month in case of an emergency. This does not have to be your typical monthly spend. It can be the amount you’d need to pay your bills, purchase food and sustain yourself and your family. In the event you lose your job, you may be willing to forgo many of your frivolous expenses until you are able to find work. Calculating this lower expense number makes it easier for you to reach your goal.
2) Pay down most debt.
In order to pay down your debt, you’ll first want to take inventory of what debt you have. List out each debt with its respective interest rate, payment date and minimum payment. From there, you can create a plan to tackle it. While credit card debt is a reality for many, its often the most expensive debt out there, so you may want to prioritize paying that debt off first. With interest rates of 20 percent not being uncommon, it can end up costing you a lot of wasted money in interest. You will then create similar plans for paying down any other loans.
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