While you enjoy the good life as you approach age 40, don’t lose sight of these financial goals!

Reaching the age of 40 is quite a milestone. By now, you likely have a stable career, a family, and a home. Life is probably about following routines you have perfected over the last few years. You are comfortable.

Your financial stability, on the other hand, is something you can not forget at this stage in your life. When it comes to personal money management, it’s not a good idea to get too comfortable.

While retirement and beyond may have seemed far away or even insignificant when you were preoccupied during your 20s and 30s, it has crept up on you and is now just around the corner.

You could be reaching your peak earning years and bringing less debt as you reach your 40s. This is an important part of personal finance management in Malaysia. Before you proceed to reward yourself, consider first whether you have achieved these basic milestones the average 40-year-old should have in hand.

Goal #1. A Fully-loaded Emergency Fund

You are no more vulnerable to emergencies as a result of turning 40 than you would be at any other age. But, the truth is that everyone wants a healthy cash reserve, and if you’ve been slacking in this area, use 40 as a marker to get that vital item checked off your to-do list.

You should have enough funds in your emergency fund to cover three to six months’ worth of living expenses. This way, if you lose your job and can’t find new jobs for a few months, you won’t have to think about going into debt to pay your bills.

Likewise, you never know when a big cost, such as a faulty car engine, an unforeseen hospital stay, or a sinking base, will fall into your lap. Getting a balanced emergency fund will not only secure your finances but will also alleviate some of the tension that comes with unexpected expenses.

Goal #2. Healthy Retirement Savings Progress

It is recommended that you commit 10% to 15% of your annual income to retirement savings during your 20s and 30s, to save three to six times your current salary by the age of 40. Although this is an attainable target if you start early, don’t get discouraged if you haven’t achieved it yet. Many of us are still at least two decades away from retirement at the age of 40; there is still time to get on track with your retirement plans. Put it as a big goal to achieve!

Don’t treat your retirement with a “set it and forget it” mentality. Your finances are surely affected as a result of life events so make progress on your savings when your income is good right now. Getting married, for example, may result in more money coming into your household as a result of a second income. Maybe you got a new job and got a big raise, which you might put into your retirement savings account. A loved one may have died, or you may have welcomed a new baby into your family, resulting in decreased cash flow.

Goal #3. No Debt, or On The Road to No Debt

It becomes increasingly necessary to carefully control your debt commitments as the year’s pass. Your ability to accumulate wealth would be hindered by financial loans, credit card debt, or a mortgage. Having a plan to pay off your debt is the most important thing you can do. Lowering your debt obligations would place you in a stronger financial position to continue saving in your 40s.

Aside from property mortgage and vehicle loan, having no other outstanding financial commitments is a lofty target at any age. Still, getting out of debt by 40 is immensely advantageous because it will make it easier for you to save for retirement, pay off your mortgage, cover college tuition, and cope with the many other expenses you’ll face in the final decades of your career.

Cutting expenses in your budget is a great way to stay out of debt in the future, but if you’re still in debt, you’ll need to formulate a strategy for getting out of it fast. Start by going through all of your debts and paying off the ones with the highest interest rates first. You may even consider taking on a part-time job to supplement your salary. In any case, concentrate on bringing your debt load to zero so that once you reach 40, you’re not wasting money on regular debt payments.

Goal #4. Have a Will

The fact that you’ve turned 40 doesn’t have to be the driving force behind your decision to write a will. Rather, regardless of how old or young you are, you need a will if you want to have a say on how your properties are allocated after your death. The good news is that, unless your estate is especially messy, making a will is a reasonably easy practice.

You can make your own will, but if you want to ensure that the document is legally sound, you should look to professional will writing services.

Goal #5. Personal Conclusion

Each and every one of us are individually and uniquely made. Likewise so should our personal and financial goals be.

Developing a strategy to achieve your financial targets does not have to be challenging. Set goals for yourself based on milestones you want to reach by a certain age. The planning process would become more approachable as a result of this.

If you find yourself deeply frustrated, confused, or lost, do reach out and engage a licensed financial planner to help you sort out your priorities and advise you the best way to achieve your goals.

Signup for a free MyPF membership and get connected to a licensed financial planner.

How close are you to 40 and have you made progress on achieving these goals yet?

 

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