Every decade of our life is a milestone in itself. Each decade of your life presents you new opportunities and new challenges and it’s completely up to you, how much you deal with these and come out victorious. But being in 40’s brings you some more and important milestones to achieve. Being in 40’s or even if you are entering 40’s brings more responsibilities to you as by this age you have reached half of the average life, which on the other hand implies that now only half of your earning span is left more importantly when you are a salaried individual. By this age in most of the cases our parents are retired and we have to be financially stronger to support them. By 40 our children are grown up now and may be only few years away from entering college. A good college needs a good amount of money which you can only provide when you will be financially strong. Saving for children’s study, marriage are the Financial Milestones to Achieve before You Turn 40 and along with this there are some more which one should achieve.
Create A Strong Emergency Fund
No one can deny the fact that emergencies can come anytime and the only thing we can do to coop with them is to be prepared for it and have some saved fund for the emergencies. To have a Strong emergency fund is advised to us from many but do we implement this? If not it’s not too late to increase your emergency saving fund. There may be any medical emergency where lack of money can cost you much so it’s always better to be prepared and have some strong savings.
Fund For Your Retirement
60 is the official age of retirement for most of the profession in India and once you reach your 40’s that means only half of your earning span is left being a salaried person. Even if you were not doing much for your retirement savings start it now. PPF is the basic and common thing where people save for their retirement but apart from this try to save more by having policies or wherever you think it is right to do. After retirement your income is going to become half or even it ends in most of the public sector. So try to save as much as you can so, that you can enjoy a better future.
Have High Return, Low Risk Investments
Money don’t grow much simply by saving. Investment is the only way to grow your money with time. Try to invest more in those things where there is grunted profit such as purchase of property, gold. Investment in mutual funds and shares is also an option to you now a days.
Clear up all Your Debts
Before you enter your 40’s it is very important that you clear up all your credit card dues in full, repay all your personal loan(s), consumer durable loans, vehicle loans. The only debt that you should carry to your 40’s is your home loan. Unsecured loans cost much more compared to the secured home loans. The amount you would save on repayment of your unsecured loans can be invested in other useful places, like retirement savings, extra insurance, college funds or a down payment for your house.
Make a Will
Nobody knows how long they are going to live. A sudden demise without a legal will, can lead to undivided property and wealth among the heirs, which can turn ugly later on. It is highly advisable that once you have acquired good enough fixed assets and wealth; you create a legal will with the help of a good lawyer which would clearly mention the distribution of property and wealth amongst the heirs. It is also very important to take care that you should have power of attorney for long enough.
Buy Extra Insurance than You Thought Necessary
In your 20’s, when your career is just starting, you are newly married or about to be married, having a just enough life/term insurance along with a medical insurance is more than enough. But in your 30’s the scenario changes: you now have kids who are growing up faster than you know, you have a house on mortgage, and your parents are retired and older and you have now multiple upcoming liabilities like college education of your kids. The insurance amount you thought was enough in your 20’s will definitely not be able to cover all these costs, in the unfortunate case of your sudden demise. Hence before you enter your 40’s it would be good to buy extra insurance which would provide cover for early demise, suicide, disability (both temporary and permanent) and job loss. Apart from term insurance, there should be a decent medical insurance to cover all the big diseases like cancer.
Become a Tax Saving Expert
Tax saving was fun in your 20’s with your newly started career and entry level pay scale. But in your 30’s you would have settled in your career and earning a handsome amount of money with some serious commitments to long term investments. By the time you are 40 you should be aware of all the tax saving schemes and be utilizing them to the full. All the tax saving investments are for long term and can be used later on for funding your kids college education or as your retirement fund. But whatever be the purpose of saving, you should be exploiting tax saving schemes to its full.
Buy a Home, if not Bought Already
Well, this should be your life goal to achieve by the age of 30. But it might not hold for many, especially those who start their career late, maybe because of higher studies or for some other reasons. It is ok to be late, but once your career starts, retirement fund and a house should be your priority goals. Even if you were not able to achieve it so far, 40 is the age which you should target to have a home of your own. Even at the age of 40, one can get a home loan for a maximum tenure of 25 years. This home will not only just be a shelter for you and your family but also provide you cover in many difficulties of life.
Achieving these financial milestones before turning 40 will definitely take away your financial burden in future and will help you to make all your dreams would turn into reality!