7 important financial planning to do when you are in your early 40s
Written by Som on September 4, 2016
Time flies. Suddenly in early 40s you realize that you have crossed a major path of your life.
Your 40s should be the most financially empowering decade of your life. After all, both men and women reach their peak earning potential in their 40s. At this stage you are likely to be settled with family and financial stable in lifestyle. The forties are the time when important facts like child’s education, their marriage and inevitably own health warning alarm. These reasons are imperative to make you think for a financial planning.
7 important financial planning to do when you are in your early 40s
- Contingency plan for your income:
By the time you are in early 40s, you are mostly in middle or senior management in your job. The volatile world economic condition may affect your mid 40s career from employment perspective. Corporate careers are getting increasingly shorter due to market condition and new technologies. Searching/Switching job is comparatively tougher in this stage.
Keep a contingency plan before any uncertainty grasps you. Think of any side business or any secondary work which can support your financial sustainability.
- Reduce debt:
Debt has a cost (interest) associated with it. In this stage of life if your significant income goes to repay the debt then it can be damaging your financial future. Try to get free from all debts as quickly as possible. A debt free life makes you happy and confident to step ahead to more secure future.
- Family Health Cover:
Health issues are inevitable from this stage of life. Your family’s health is also on your shoulder. Think of a family health cover. Additionally if you are financially responsible for your senior citizen parents then health insurance becomes more crucial.
If your employer provided health insurance is not enough then go for buying separate medi claim for your family.
- Life Cover:
If your life insurance if not adequate, your loved ones are likely to endure financial stress and compromise on their aspirations. Your life insurance cover should be adequate to meet the income needs of your family in the event of an untimely death. It should NOT be as per the agent preferable scheme or the lowest premium plan.
- Plan for your child’s education:
Education is getting more expensive every year. Normal support plan to fulfill the dream of your child’s career is not enough. It needs a careful investment to support your child’s aspiration.
- Retirement planning:
Retirement planning is something which we think at end. It’s the most common and big mistake. It’s always better to start your retirement planning as early as possible but even if you start in your early 40s you have time.
You need to have a clear vision how your retire life should look like. Otherwise you may need to compromise till the end of life.
- Invest conservatively:
Depending on your tolerance for risk, some advisors caution people from being too conservative with their investments as they reach their 40s. Arguably, you still have another 20 or so years ahead of you to reap potential gains from your investment choices
There is no particular formula to solve the equation of life. Be disciplined, love your family and respect time & money, you will lead a better life.
Som is a Cloud Infrastructure Architect, Public Speaker, and a Technical Consultant working in an MNC. He has around 15 years of accomplishments in IT solutions delivery for various financial institutions across the globe.
Som is the founder of “e2e Solution Architect“ and Udemy instructor. End to End Solution Architect is an educational forum for Data Science, Machine Learning, and end-to-end Cloud solutions for large-scale production environments.
