How to Save Money- Financial Planning in your 40s?

How to Save Money- Financial Planning in your 40s | Aviva India Blog

Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like. – Will Smith

Every decade of life comes with different sets of financial challenges as well as opportunities.

In your 20s, you spend the most carefree time of your life.

Your 30s bring an entirely new set of responsibilities including career, marriage, and children.

However, in your 40s, you feel a little calmer as you are earning very well, you don’t feel either young or old, you have outgrown the hectic stage of 30s when you struggle to balance family and career and your children have now grown up.

However, like every stage of life, 40s also comes with some financial challenges and you are torn between the two biggest priorities – saving for the college education of your children and preparing for retirement.

So, the question –“how to save money?” remains the same. Networking through some top financial advisors, we have prepared a list of financial moves you can make to save money in your 40s.

Save for the college fee of your children

As a parent, you wish to give your children the best education that money can buy. Your early 40s is the high time when you should start saving money for this keeping in mind the type of educational course your child is probably going to take. You can create a separate fund for it or start a new SIP. However, don’t ever get tempted to use your retirement fund for this.

Related: What does your son's education cost look like 10 years from now

Stay away from lifestyle inflation

One of the biggest benefits of being in your 40s is the financial stability you gain. You are most likely making a decent amount of money. You can afford multiple wants in addition to your basic needs. But, for a sound financial plan, it is advisable to avoid lifestyle inflation. You can still enjoy certain things, like a family vacation. But it is important not to spend all of your money on upgrading your lifestyle or keep up with your neighborhood Joneses. Lifestyle inflation prevents maximizing your saving which you will least wish in your 40s.

Related: How to Balance your Financial Life and Lifestyle Inflation

Take your retirement seriously

A sound retirement plan starts when you are in your 30s, and you must have one. Now you are in your 40s, it is time to adjust your retirement account contribution. Upgrade it as you are making more money than ten years ago. You can boost up your retirement contribution by creating different saving accounts, diversifying your investments and contributing money towards Pension plans.

Related: 4 reasons why Retirement Plans are a must buy

Reconsider home improvement projects

Beware of little expenses; a small leak will sink a great ship – Benjamin Franklin

As you are earning well, it is tempting to get a short-term loan and use that money for home improvement projects. It is essential to understand that home improvement is not an investment. It is not something you are likely to recoup if you wish such a thing in future. Such projects often cost much on your wallet than you imagine. Weight the improvements along with the funds you need to get them done against your savings and investment.

Related: Aviva’s i-Term Smart: A Term Plan That Fits Every Budget

Take care of your health

If you are picture your future self as an old (wo)manenjoying his/her life with a happy family, take care of your health. 40s is a stage when you get prone to serious health problems, especially when you don’t take care of this important aspect of your life. Avoid junk, and limit sugar and oil consumption. Join a regular fitness program, like cycling, morning walk, yoga, gym, meditation, etc. As your children are now grown up, you can spare time from your everyday schedule for exercise. A healthy lifestyle will keep you happy and away from unwanted medical treatments and costs. Make sure you’re covered against critical illnesses.

Related: Planning for health cover: Why mediclaim alone is not enough

Talk to your parents about finances

As you are in your 40s, your parents are retired. It is time for you to take their financial responsibility and talk to them about their retirement plans and finances. A candid talk with them will give you an insight that how much financial burden you will have to bear regarding your parents’ retirement. Discuss everything related to the subject, like their future financial plans, retirement plans, any debt they are still paying off, health insurance coverage, etc.

Related: Show Appreciation to Your Parents: Gift them a Heart Care Plan

Maximize your earning

Maximizing your sources of income boosts up the financial stability. You can do it by adding a new skill set in your portfolio which can uplift your income or make you eligible for a raise or increment. There are plenty of online courses to help you out. In addition, don’t just focus on how much money you are taking home every month. Make sure that you are taking full advantage of the employee benefits that can contribute to your retirement security as well as build wealth.

Insure Yourself

Life can throw curveballs at you anytime and it is always advisable to be prepared. Make sure you have sufficient life cover so that your family’s future is always financially secure.

Saving money for your retirement, your parents, and college education for your children take the center stage in your 40s. However, don’t forget to enjoy your money as you would least want to regret 20 years from now for the pleasures of life you didn’t savor.

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AN Aug 20/18

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