Your 40s represent a significant period in your life, personally and financially. You’re older, wiser and situated, but there are still a few things you haven’t figured out yet— like how to pay for your children’s college education and how you’re going to afford retirement.
Though you might feel as if you’re in a “good place,” becoming complacent could have a negative impact on your financial health. Continue reading to find out what 40-somethings are doing wrong and what you should be doing instead.
- Too much spending, not enough saving. If you don’t have a plan with your money (which many 40-something people don’t,) you might find that you have become accustomed to living paycheck to paycheck, because let’s face it- once you hit your 40s, the amount of expenses you have seems to inflate. A great way to combat this common financial woe is to make your money work for you. Depositing just a small portion of your money into a Money Market account or even a Regular Savings on a consistent basis could help you to build that emergency fund that will come in handy one day.
- Paying too much for financial advice. Countless people with financial distresses turn to financial advisors to steer them in the right direction. Some of these people happen to be past the age of 40, preparing for retirement. It’s common that financial advisors will work for a fee, but even some advisors tack on an additional interest applied to the money they have helped clients to invest. But really- why should someone who is in need of financial help, have to pay for financial advice? SeaComm has acknowledged this dilemma, and offers it’s members free personal financial advisor services, helping people to achieve their financial goals free of charge.
- Putting kids’ college ahead of retirement savings. If you’re retirement plan isn’t already on target or ahead of where it was projected to be, funding your kids’ education is a bad move. If need be, your children can take out a loan for their education, but you can’t take out a loan to live on after you retire.
- Dipping into your retirement funds. There is a power in your retirement plan- it’s called “time.” When you dip into your retirement funds, regardless of your intention, you are taking away the time that makes long-term savings so effective. Also- cashing in on your 401k before you turn 59 will likely mean a 10 percent penalty included in your income taxes. It’s in your best interest to avoid withdrawing from any retirement plan or 401k, instead, you might want to look into getting a personal loan or taking out a home equity line of credit. These are safer options that will still allow you to keep your retirement savings under lock and key.