Avoid these financial mistakes in your 40s

October 17, 2019 Finance Talk Valli Sarvani No comments

At every stage of life, financial priorities are changed. 20s are too early and many may not get jobs, financial priorities will be mainly income improvement at this stage. After 60 years, many may depend on pension income or their children, they don’t have a chance to invest more and take a risk.

40s are crucial in one’s life and financial journey. It is a stage that needs to be balanced with present financial challenges and future needs.

Most people have to fund their children’s education and invest for their retirement at this age.

So, you should be extra cautious with your finances and make use of them wisely.

Also, you should avoid these common mistakes in your 40s:

Ignoring emergencies: The emergency fund is very essential to meet unforeseen emergencies. But, several people ignore it. So, first, keep at least 30 per cent of your income as an emergency fund and spend the remaining money for your expenses. You should also have life insurance and health insurance for all your family members.

Investing wrongly: Many people do not know how to balance between present and future needs. So, they invest in the wrong portfolio. Most of them rely too much on real estate which is not correct as per financial experts. Many aimed to own a self-occupied home which is good. But, beyond that, many invest in sites in the outskirts of the city which may not come in handy in times of need.

Undisciplined spending: Due to higher income, several people rely on consumer loans or credit cards. The repayment drains all of the savings and ends with empty hands. Hence, wise spending is essential considering the tax benefits.

Confusion between the present and future goals: The two biggest goals at this stage are children’s education and saving for retirement. You should not mix these and save for both of these. If you run after one goal and ignore the other, achieving it would become difficult. Hence, start saving from the very beginning of your career to meet your future goals.

Image Credit : Steven Depolo CC BY 2.0