Your 30s and 40s can really sneak up on you in terms of your finances. One day you're living footloose and fancy-free as a 20-year-old and the next day everyone is asking you why you haven't gotten around to opening up a 401(k) yet. Thankfully, saving money doesn't necessarily have to be a difficult or perplexing enigma you have to solve immediately. There are ways that you can start today — regardless of how much money you make or how much debt you have.
Do a Little Homework
While you may be many years removed from school, it doesn't hurt to do a little homework on your finances. This is a good (if sometimes difficult) time to consider checking your credit score and making plans for what it is you want out of life. Whether it's to buy a home in five years or pare down your student debt to 15 percent, it helps to have solid, definable goals. If you choose to go this route, design your goals to be ambitious without abandoning reality completely. It can be helpful to take a break for a few days before coming back to the table to decide how you're actually going to go about managing your money to achieve your goals.
Don't Forget Your Retirement
Your 30s and 40s may still seem a world away from retirement, but ignoring the impending event will only make things worse once you turn 50. Financial experts recommend that you put your pay increases into a retirement account rather than allowing them to become absorbed into your regular income. Once you have the extra money in hand, you're likely to become dependent on it in a relatively short amount of time. If you talk to a financial planner, you have the means to consult them about the type of retirement account that's right for you. For example, some retirement accounts tax you on the money placed into the account, while others tax you when taking money out of the account. The right one will heavily depend on your income, assets, and plans.
One of the biggest things you can potentially do when you manage your money is to start stashing money away for emergencies. In addition to preparing for retirement, it's a way to cut down on the impact a catastrophe will have on you and your family. From car breakdowns to stock plunges, you never know when you're going to have to handle unexpected financial demands. If you happen to own any kind of company stock, your 30s and 40s is the best time to start monitoring its progress. You're likely already established in your company at this point, meaning it will help to have a solid idea of its performance before deciding when to sell.
Make a List
If finances still feel foreign to you at this age, start making a list of what you spend and what you save. You don't have to be a numbers whiz to start identifying what you can cut down on and which accounts you could be focusing on. If you're feeling overwhelmed by the amount of debt you have, it may be helpful to consolidate it all into one payment. That payment may even have a lower average rate than that which you're currently paying. This step can also make your list a lot shorter and easier to manage. Once you have a base idea of where each penny is going, you can start making changes to manage it all a little better.
Financial smarts aren't something that you learn once and then implement immediately. It's a lifelong skill that you'll likely still be trying to master in your 80s and 90s. Starting sooner rather than later can really make it easier on your future self.
Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.