Financial milestones by age 40 (What you need to have in place)

Are you approaching 40 and feeling like it’s time to get your finances in order?

You’re not alone.

This is a common time for people to take stock of their financial situation and make changes that will help them prepare for retirement.

To get you started, here are some milestones to aim for by the time you reach 40.

Keep in mind that these are just guidelines – everyone’s situation is different, so tailor your plan to fit your needs.

You can be on track for a sound financial future with a little hard work. Let’s take a look at some of the key financial milestones by age 40!

Financial milestones by age 40

You need a financial plan for your future

Having a financial plan for your future is critical. You need to know what you will need and how much money you’ll need. If you don’t, it’s like driving without headlights-you’re bound to crash eventually. Plenty of things can happen between now and retirement: emergencies, unexpected expenses, job changes, or even needing more caregiving help as we grow older.

A good financial plan should be the foundation of every family’s strategy for tomorrow! So let’s look at some ways to get started with planning your finances today.

How much do I need? The amount of money that people save varies depending on their lifestyle and needs in retirement; however, there are good guidelines for setting the proper retirement savings.

What does good look like, and what do you think that will cost?

Big-ticket items and ongoing monthly costs?

What about emergencies?

Having a financial plan is important for when things go wrong and when they go right!

Whether you’re looking to buy your first home or start a family, the earlier you can plough back money from each paycheck into investments and savings accounts, the better off you will be in the long run.

Invest in yourself

One of the best things you can do at 40 as part of your financial plan is to invest in yourself by getting an education, improving your skills, or pursuing new opportunities that will help bring in more income.

Not only will this help give you more control over your future, but it’s also likely to lead to more opportunities, including better work. It’s never too early (or too late!) to start!

Consider how much money you’ll need to live comfortably in retirement

You might feel retirement is too far off to spend too much time thinking about, but you need to start taking action now.

If you leave it much longer, it will become a lot more expensive and painful to save and invest for a comfortable, dignified and independent lifestyle in retirement.

Start thinking about retirement!

You might want to put off looking at their finances during the early stages of adulthood but think about this-the sooner you start planning for your future, the more time you’ll have to invest your money and watch it grow.

Figuring out how much you might need to save for retirement is much easier if you know how much it costs to live now. You can then adjust this figure for any additions or changes you want to make to reach your ideal lifestyle.

One method is to use the 25 times calculation. Take your yearly spending and time it by 25 to reach your retirement fund needs. 

30k yearly spend x 35 = 750k. This is just a guide amount but gives you direction to travel in. 

Understand the difference between an emergency fund and a long-term savings account

An emergency fund and a long-term savings account are both important, but they serve different purposes.

A long-term savings account is for larger purchases that you expect to make over a longer period, like a car, house, marriage, children’s education or retirement.

Whereas an emergency fund is intended for unexpected events that might arise.

The key here is balance! Just as it’s important to save with a long term goal in mind, it’s equally vital to keep your emergency savings account healthy and not touch those funds unless absolutely necessary

A common recommendation for an emergency fund is 3 to 6 months of expenses, but you might want more than this, depending on your circumstances and risk tolerance.

Whatever the amount, it should help you sleep at night, knowing that you are covered for nearly any type of emergency.

It’s important to have both in order to be prepared for any situation that might come up!

Start saving early, while your income is high

One of the best ways to save for retirement is to start early. When you’re young and just starting your career, spending all of your money on fun things can be tempting.

But if you start saving early, you’ll be able to build up a nice nest egg that will come in handy down the road. Even if you can only save a little bit each month, it will add up over time!

You don’t know what the future holds, so it’s best to be prepared for whatever might happen. That means being able to cover expenses in case of an emergency, which is why you need an emergency fund. When you have unexpected car repairs or medical bills come up, you’ll have money saved up to help pay for them!

The earlier you start saving for retirement, the less money you’ll need to invest each month in order to reach your goal.

Use the power of compound interest, interest on your interest. The sooner you start this cash machine, the bigger it can grow for you.

Albert Einstein described compound interest as the “eighth wonder of the world,” saying, “he who understands it, earns it; he who doesn’t pays for it.

Track your spending habits with a budgeting tool or app

If you’re not sure where all of your money is going every month, the easiest way to figure it out is by creating a budget. That also serves as a great opportunity to see if there are any areas in which you can improve!

A budget can help you track your spending habits and see where you might be able to save some money. There are many different budgeting tools and apps available, so find one that works best for you and start tracking your spending today!

Keeping track of your spending can be a daunting task, especially if you’re not sure where to start.

It’s hard to know how to get started when it comes to budgeting and tracking your spending. You might feel like you don’t have enough money to even bother with a budget.

There are many different budgeting tools and apps available, so find one that works best for you and start tracking your spending today! Some of the most popular budgeting tools include:


-You Need a Budget (YNAB)


-Money Dashboard

-Personal Capital

WHICH review a few of them here

Or you could go old school and use the Kakeibo, a traditional Japanese household budgeting system.

This video describes the method.

Consider what kind of insurance coverage you need based on your age and income level (i.e., life, disability, health)

When you turn 40, you might also want to start thinking about insurance in a little more detail.

This is because, at this age, you have usually collected a number of financial commitments.

For example, you might want to start saving for retirement or covering larger expenses with your savings account.

You should also think about what kind of insurance coverage you need based on your age and income level.

That could include life insurance, disability insurance, or health insurance.

Consider what kind of life insurance you need based on your age and income level. Who would be impacted, and how bad might it get for them if something went wrong?

-How much insurance do you need

That’s a question that can only be answered by looking at your individual circumstances. However, here are some general guidelines to help you get started:

If you have a spouse, children or care for someone who would be financially impacted if something happened to you, how much money might they need to cope with and then continue living without you?

  • Do you have debts that would need paying off? A mortgage or loans that the people left behind could not manage without you.
  • Do you have children you want to get through university or until they are financially independent?
  • Where else will the person or persons left behind to get an income form if not you, and will it be enough?
  • How much insurance can you afford?

These are all factors that can help you figure out how much is enough.

Although paying for insurance might feel like wasted money, it might be your best waste of money because it will prevent a crisis from turning into a disaster.

-life insurance

Do you have a plan for if something goes wrong?

When you turn 40, it’s a good time to start thinking about life insurance. This is because you quite often have a number of financial commitments and dependents at this age.

For example, you might want to start saving for retirement or covering larger expenses with your savings account. You should also think about what kind of life insurance coverage you need based on your age and income level.

That could include whole life insurance, term life insurance, or universal life insurance.

How will those left behind carry on without you if you lose your life? AS they will have to live without your income forever!

If you have significant commitments like people you care for, mortgages, or significant debts, are you going to help pay them off with insurance or just leave those left behind to struggle on.

-Income or disability protection

You might feel like you don’t have enough money to even bother with income protection-but that’s the point.

Income protection is designed to help when the unexpected happens and could mean the difference between being able to pay rent or not.

The type of insurance pays out when you can’t work for a period or permanently due to health-related issues.

-Critical illness

Pays out an immediate lump sum if you’re diagnosed with a terminal illness or develop a critical illness. This can provide financial security for your family should you not be able to work while you are unwell or going through treatment.

-Health insurance

This insurance can provide cash benefits to pay for costs incurred when you need medical treatment or rehabilitation services. This can ensure that you have money available to handle any unexpected costs while you’re recovering, and it gives you some financial security while you’re out of work.

-Work-based insurances

Check with your workplace first as you might find a number of these insurances are already in place.

It’s fairly common for some employers to offer death in service and health insurance, so you may not need to double these up with your own insurance also.

Conclusion: financial milestones by age 40

When you turn 40, it’s a good time to start thinking about your future and what kind of financial milestones you want to hit. That includes saving for retirement, tracking your spending habits, and considering what kind of insurance coverage you need. These are all important steps in securing your financial future!

Get in touch if you want some help planning your finance at 40.

FAQ financial milestones to reach by age 40

Q1: What are some common financial milestones people hit by 40?

A1: Some common financial milestones people hit by 40 include saving for retirement, tracking your spending habits, and considering what kind of insurance coverage you need.

Q2: How can I save for retirement by 40?

A2: One way to save for retirement by 40 is to start saving and investing in your 20’s. Increasing your income and saving more money each month will help you reach financial independence or FIRE much earlier.
You will also probably want to try and create multiple sources of income, including passive ones that will support your costs of living and make work optional at 40.

Q3: What should I do if I have debt at 40?

A3: If you have debt at 40, you may want to consider paying it off as quickly as possible depending on the debt. In addition to looking into ways to cut your expenses, you should also find a way to increase your income in order to pay off that debt.

Q4: What are some common health issues people have by the time they turn 40?

A4: Some common health issues people have by the time they turn 40 include obesity, heart disease, and diabetes. It’s important to maintain a healthy lifestyle in order to stave off these conditions and avoid complications later on.
What’s the point of having lots of money if you don’t have your health?

Q5: How can I increase my income and save more money at 40?

A5: There are many ways to increase your income and save more money at 40, such as cutting out any unnecessary expenses, finding ways to earn & create extra income. Take advantage of any free money offers at your workplace like a pension.

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