How to make smart money decisions in your 40’s

Ben Nash

If you neglect planning in your 40’s, it can mean you struggle to play catch up in later years, and can end up being forced to work to longer than you want to.

Your 40’s are your peak earning years and the time to be thinking about the future and how to set yourself up so you can wind back from full time work on your own terms and at your preferred age.

The sooner you focus on boosting your investments like super, personal investments, and property investments, the better money outcomes you’ll get in the future and the easier it will be to build serious momentum moving into future years.

Don’t delay planning to get an idea of where you’re headed financially. Doing this sooner will help you make any course corrections that will give you better outcomes in the future.

You should focus on either paying down mortgage debt on your home, or if you’re renting, planning to buy the property you want to live in for your later years.

If you’re in your own home you should develop a clear exit plan for your mortgage and understand what you need to do so you aren’t running significant debt in later years. There are ways to do this faster like debt recycling, which will help you grow your investments, pay down your mortgage, and cut your tax bill, all at the same time without impacting your cashflow.

If you’re renting, get clear on what you need to do to buy your dream home for later years. Planning for that purchase now will make it much easier to get what you want. If you’re already in your dream home, it’s time to get focussed about how you can clear your debt so you don’t have to run a mortgage in later years. Spend the time to map out your options and get clear on your planning so you have the track to follow. Do this now so you can get crystal clear on your targets and what you need to do to hit them.

It’s also likely your tax bill is increasing into your 40’s, so review your position and the opportunities available to reduce tax. Your investments should be structured in the most tax effective way possible so you can hold onto more of your earnings to use for your lifestyle or to get ahead.

You should be boosting your super for eventual retirement, and consider strategies like salary sacrifice to grow your super tax effectively. You should also review the type of fund you have and how your investments are set up, so your super is working hard for you and not just your super company.

Depending on when you want to retire or wind back from employment it’s important to build your personal investments like cash, shares, or property to fund your lifestyle between the time you want to wind back from full time work and the time you can access your super.

Think about how your income will progress into the future and how much you’ll need to reduce work when you want. Then set up an investment plan to provide this income in coming years. The more time you have for this the easier it’s going to be, so don’t wait until later years to start planning or you’ll leave yourself short.

Download: Five Steps to ‘Adulting’ with Money

There are no ‘good’ money choices. And you’ve probably noticed how the time keeps passing but you don’t really seem to make much progress getting ahead. And if you don’t know the rules of the game, mistakes to avoid, or the steps you need to take, taking action and getting started is SUPER SCARY. In this free eBook, we cover the five simple steps to ‘adulting’ with money and how to set up your finances to squeeze more out of your income, savings, and investments.

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