Top Tips for those in their 40s

Your 40s are arguably the peak time in your career – you’re very well-established, you’re heading towards the top of your game, and it’s the time when you can really focus on accumulation of wealth. Are you still in debt? How much are you saving? Do you hate your job? Now is the time to take a step back and figure some things out.

Here are our top tips:

1. Save, save, save that extra salary

These are your highest potential earning years. Investing, great returns – both are brilliant but saving your extra salary is a much bigger component of how much you’re going to retire with. With every salary increase, put away 50% of it into savings. Don’t increase your lifestyle by 100% with every pay rise. You’ll be acclimatising yourself to an ever-more-fabulous way of life which you probably can’t maintain once you reach retirement.

2. Insurance audit

You should do a needs-analysis on your insurance – life insurance, in particular, is very pertinent if you have children and/or a spouse. It’s a grim thought indeed but you want to be thinking about looking after them in the event that you’re not around anymore. Check your home/contents/health and auto insurance policies every so often to make sure there aren’t any nasty surprises when you try and claim. There are umbrella policies you can add as an extra layer of protection, too. Look into those.

3. Junior savings

If you have a child, start a savings account for him or her as soon as they’re born. Even if you can only save a small amount, at least it’s something – soon you’ll be paying for school, tennis, ballet, university… so build the pot as early as possible!

4. The saving game

It’s a non-negotiable that you have at least six months of your salary in a savings account by this point: in a safe, liquid account that you can access easily. This should be an account that can cover planned expenses: e.g. if you know that in 18 months’ time your roof will need replacing, make sure that you’re keeping that money aside.

5. Segmenting your savings

On top of your everyday six months funds, you should have savings accounts which align to what’s important to you: goal accounts, if you will. Travel, gifts, and also an extra account for emergencies, should they arise. You don’t want to dip into your regular account to pay for holidays.

6. Digging out the debt

If you’re still saddled with a lot of debt, it’s really time to make a huge dent in that. You don’t want to reach the end of your working life and still have a crippling mortgage. Now is the time to concentrate on getting that debt down.

7. Be aggressive with your investing

You still have time! Obviously around retirement age you’ll be more cautious, but in your 40s you still have the luxury of time, so you can invest aggressively for maximum growth.

8. You have time – but probably not as much as you think

Carrying on from the last tip, you do need to be thinking about retirement. By now you should have a very sensible plan for retirement because, while it’s still a while away, it will creep up quickly! You should be increasing payments into investments for retirement – and considering what sort of lifestyle you want when you retire… knowing that will inform how much you need.

9. Changing the daily grind

We have a long working life these days – are you happy doing what you’re doing for eight hours every day? There are still a few decades to go before you’re looking at retiring. If you’re dreading going in every day, this could be a good time to research other options: look at job boards, join forums and groups, really research any new fields you’re interested in. It’s possible you may no longer require the salary level you’ve reached so you could look at options for part-time work, if work-life balance is an issue.

10. The perks of owning a credit card

If you use your credit card properly – that is, spending within your means and then paying it off every month – there are some amazing perks. Whether it’s air miles, shopping credits, hotel upgrades: look for the bonus options that are right for you, and then use your card for as much as you can – remembering you need to pay it off in its entirety at the end of the month. Not much point in racking up debt in order to get free flights.

About Expat Financial

Expat Financial is a team of highly experienced Hong Kong based Financial Advisors. As Expats ourselves we understand the challenges of living and working in a foreign country. We use our Expat experience along with our extensive financial expertise to help you maximise the benefits of working and living offshore.

Regardless of whether you’re a financial novice or a seasoned investor we specialise in helping you to achieve your goals.

Additional Information Resources

Additional information resources are available by clicking on the links below:

• Financial Planning
• Investments 
• Insurance 
• Pensions
• Tools & Calculators
• News