Financial Goals to Achieve Before Turning 40
In your 40s, you are at a crucial stage in your life as you are responsible for paying off financial debts, your child’s education, planning your retirement, all at the same time. Did you know that according to Arthayantra, a financial planning firm, investors think of saving for their retirement when they are in their 30s but implement the plan in their 40s? If the anxiety of managing your finances is stressing you out, this article is for you. Here are the financial goals that you must achieve before turning 40.
- Be debt-free
The ability to purchase a home, car, and other products through easy EMIs has encouraged a pro-credit sentiment among the people. Financial products such as home loans, car loans, and credit cards are necessary to enjoy a comfortable life but paying them off responsibly is essential too. In your 30s, if you have a good amount of investment, you can use some of your investment to pay off your debt.
- Build an emergency corpus
Imagine this: you are in your 40s, with your investments and savings in place. However, there is a family emergency that drains you of everything which takes a toll on your financial health. Now, in your 40s you are required to build everything from scratch. Frightening, isn’t it? Hence, set aside an amount, ideally 3 to 6 times your income to be prepared for emergencies such as job loss, financial crisis, health issues, and more.
- Increase retirement fund
Although it is true that you must start planning for your retirement in your early 30s, you must increase the amount that goes into your retirement kitty before you are 40. If you have followed aggressive funds in your 30s, at 40s you must opt for more balanced funds for your retirement, which completely depends on your risk appetite. If you are starting to save for your retirement in your 30s, please factor in the inflation too.
- Save for your child’s higher education
Millennials opt for quality education without compromising on their dream university and parents want the best for their kids. It is essential to plan for your child’s education considering the 10-12% education inflation rate which will increase in the near future. You can consider investing in avenues such as mutual funds SIPs. Investment in education will pay the highest returns. So, invest today for your child’s future.
- Ensure your life insurance and health insurance is in place
We can’t stress the importance of term insurance and health insurance enough. Health emergencies can drain you if you are not adequately covered. Also, please remember term insurance ensures your family is financially secured in case of an untimely death. For most health and term insurance, health checks are mandatory. You are likely to develop health issues as you grow old which translates into higher premiums.
So, we hope this brings clarity on financial goals to achieve before 40. If you have queries, feel free to connect with us.
