Itâs well known life begins at forty. Doesnât it?
It should be an exciting decade, full of plans and aspirations. Itâs also likely to be a time of optimum earning potential.
Whatâs more, itâs a crucial decade to take a step back and make sure your finances are on track to meet your goals.
Thereâll be some decisions youâll already have taken in your twenties or thirties, which will have had an impact. You may have bought your own home, for example, or put some savings away in cash, investments or pensions.
If things donât look quite as rosy as youâd hoped, though, your forties are a good time to take stock, as thereâs still time to make adjustments and give your investments time to grow.
Donât forget, whatever savings you can make now will enable you to pursue your dreams later on.
Here are four key tips for shrewd financial planning at this important time of life.
Budget ruthlessly
Just because life may feel comfortable with regular pay rises and bonuses donât fall into the temptation of spending more than you need. Do you really need that Costa coffee or M&S lunch every day?
Apps like Money Dashboard or Moneyhub can be helpful in showing you where your moneyâs going. Simple steps like cancelling subscriptions or switching bill providers can make a significant difference.
Historic studies show that investments usually outperform cash savings so any disposable income you can invest will be beneficial. If you can put money aside in a pension youâll also be taking advantage of the tax relief available. Make sure you use your ISA allowance too for more accessible funds.
Carry out a protection audit
Think about what if the unexpected happened. Your forties are a time of life where you may find yourself part of whatâs known as âthe sandwich generationâ i.e. caring for elderly parents at the same time as looking after young children. This can put extra pressure on you. Make sure youâre protected should the worst happen by ensuring you have a good emergency fund in place. Also think about critical illness cover and life insurance.
Property plans
Your home will be a fundamental part of your financial planning at this time of life. If you feel you need a larger property, these are likely to be your peak earning years so now is the time to secure the best mortgage you can and find your dream home. On the other hand, if youâre quite happy where you are, it may be a good time to remortgage to get a better deal.
Family spending
Everyoneâs situation is different. You may have children at university or you may still be having to pay for nursery fees. Whatever your position, make sure you budget accordingly and allow for inflation, especially if youâre paying private school fees. Work out the priorities for your family â the best education now or a house deposit in the future. Itâs important not to derail your own life savings for the sake of your children as no one will benefit in the long run.
By doing some sound financial planning now, youâll have more hope of continuing in the style you want to live, well beyond your forties.