top money tips for your 40s

get out of consumer debt

I’ve said it before and I’ll say it again because it doesn’t matter how old you are — get out and stay out of consumer debt. We’re talking credit cards, personal loans, financed couches and TVs — if you’re heavy on these — then pay them off and get out of there! These are like weeds in what could be healthy cash flow. Ongoing repayments like these also impact your ability to save and invest.

So if you’re in your 40s, or preparing for them, here’s what you can do to make the most of the 40s decade.

review your financial goals: 

1. wills and estate planning 

You don’t need to have bucketloads of assets in order to warrant having a will made — they’re easy and quick to organise, and are an essential estate planning tool. Also set up your Power of Attorney — another crucial legal document to have organised.

2. mortgage details

Your mortgage is most likely one of your biggest day-to-day expenses, so make sure your mortgage deal are set up in the best way possible. Chat with your mortgage broker to get things sorted.

3. see a financial adviser to chat specifics to you

Everyone’s situation is personal and unique, and your 40s are a great time to chat through what your financial life has been until this point, and where you’d like it to continue to as you get closer to retirement. Ask every question and consider all of your options. Use the expertise of a financial adviser to speak into your concerns, goals and questions.

4. joint goals as a couple if you have been stuck in ‘kid mode’

(I’ve heard) having kids is brutal and beautiful simultaneously. But, kids have an amazing way of swallowing up time, energy and headspace. Time to sit and think about goals is often swallowed up by daycare drop offs, signing forms for the next season of soccer and trying to feed your fussy eater lol. Carve out some time to reassess where you’re at, and adjust or re-angle to keep heading in the direction you want to go.

“You’re at your peak, if not you will be,
so be even more intentional with your spending.”

keep planning!

1. have a plan for when you might like to retire — think through when you want to access super and/or the aged pension

There is no official retirement age in Australia. What the Australian Super system has is what’s called a preservation age, age 60, which is when you can access your superannuation (seek the support of your super fund around these details). Australia also has a set age when you are able to access the aged pension pending their income and assets tests — age 67 (at the time of this blog). Howeveryou want your retirement to look, make a plan for how you will fund your lifestyle as you wrap up work and head into retirement. Seek the support of a financial adviser and your superannuation fund.

2. consider salary sacrificing super contributions for tax saving

The closer you are to retirement, the more your superannuation needs to be a focus. You might consider adding more into your superannuation on top of what is contributed by your employer. Any additional contributions you make are tax deductible so remember to report whatever you add in yourself at tax time. Speak to your financial adviser about this.

3. consider spouse contribution & government co-contribution for lower income spouse

If you or your partner took a break from the workplace for whatever reason, consider adding extra spousal or government co-contributions to help build up their superannuation. Have a read about more superannuation options like these and tailor to suit your situation. Even a little bit can go a long way in preparing more funds for retirement. Speak to your financial adviser about this.

4. think about ageing parents — power of attorney and wills — just have the chat

There’s a good chance that around your 40s you’ll have some ageing parents to look after. Make sure you have a chat with them about their own plans, set up a will and Power of Attorney so everyone knows what’s happening in the future.

if you have kids: 

1. be present with your partner and kids

In our episode about money tips for your 40s on my millennial money, John shared his story about trying to keep a balance between maintaining a great career, but also being present with your family. In your 40s you’re deep in family and work, you’re often time poor and tired, so remind yourself as much as you can that although you are in a peak work time in your life, you also need to be around for your partner and kids.

2. review and plan for education costs

The choice for what kind of schooling you want for your kids is especially personal to your family, but the expenses can rack up. Get informed about the overall cost expectation for whatever form of education you choose — public or private.

3. charge working kids board (maybe 10% of income) and develop a flight plan (what year they will leave home for older teens)

If you have older kids living at home who are working consider setting up a board arrangement with them — it helps cover some of the day-to-day expenses you have, but also starts teaching them about rent and mortgage payments which are on their horizon. Also have a think about a flight plan/empty nest preparation plan — is there an age you’d like to have your kids out in the world living where they want, doing their own thing? Have the chat with your partner and kids about this.

4. cars for kids — discuss things like payment matching

For big things like cars, and even houses if they’re keen on it, have a chat with your partner and kids about how you’ll set them up, or encourage them to prepare. You might set up a savings plan where you match what they save, or contribute a certain percent towards their goals. This is all very personal to you and your kids so get the conversation started.

5. start having healthy age appropriate money discussions with kids

As a parent you have an amazing opportunity to teach your kids some essential money skills — even a few basic principles can set them up brilliantly so teach them what you’ve learnt. Even the mistakes you’ve made along the way can be a learning experience. Talk about things like knowing what your income and expenses are, spending less than what you are, and avoiding consumer debt. The conversations don’t have to be fancy, just start talking about it and make talking about money in your house a healthy and natural conversation.