“The only time you really live fully is from thirty to sixty. The young are slaves to dreams; the old servants of regrets. Only the middle-aged have all their five senses in the keeping of their wits.” – Theodore Roosevelt
Most people in 40s are with young kids, spouse and elderly parents. Naturally, most parts of the earnings are diverted to family’s livelihood, Kid’s tuition fees, down payments for a home loan or car loan, house rents, debts, EMIs, medical expenses, and a lot more. Now is the time you need some serious financial planning to be secured in the future.
Financial Planning at the 40s
Time is the essence when it comes to financial planning so do not delay. Ensure that you cover every aspect of life in your plan.
- The first step to financial planning is to plan for an emergency. Set up an emergency fund that is liquid and has 3 to 6 months of your usual income in an account.
- Your next priority is to clear or reduce your debts like credit card debt, loans so that you can channelize your income into savings and investments. Check your current interest rates on loans and credit cards and see if you find something with lower rates to clear them sooner.
- Next important step towards increased savings is reducing your non-committed expenses like buying an expensive car, costly vacations, etc. Stick as much as possible to the committed expenses like food, shelter, education etc. to increase savings.
- Child’s higher education expenses should be coming in the near future. Start your preparation from now on. Ensure to make right investments to meet your child education goals.
- Retirement may seem far away at the 40s. But, understand that maximum contribution to retirement savings as early as possible would allow you to lead a dignified retired life! Your returns should beat the inflation rate to meet your old-age needs. As every individual’s needs differ, it would be wise to make a personalized retirement plan.
- It’s important to have a life insurance to ensure that the dependents lead routine life even in your absence. Pick insurances such as health insurance, auto insurance, disability insurance, home insurance, auto insurance, etc. Ensure that they offer the right coverage. Do not forget to ask the right questions to the insurance agent before buying one.
In a nutshell, the 40s is the age where you have to secure your financial future as well as your dependent’s future. To be an achiever, financial planning is essential to help you meet your goals. A good plan should be based on your expenses, goals and risk profile. Approach financial advisories like ArthaYantra for a right advice towards the right direction. We are dedicated to securing the financial future of every individual by offering unbiased and personalized advice. Today is the best day to start securing your family.