Everyone knows that there are individual financial milestones adults should hit, like enjoying a good credit score or paying off college debt. However, many of us often lose motivation throughout the year. Well, not in 2020! Here are the financial milestones everyone needs to hit by the age of 40 and how best to do so…
Pay Off Debts
One of the largest debts many carry into adulthood is their student loans. Unfortunately, not everyone can pay them off right away, leading to stress and anxiety. Still, make sure to pay off those old debts before you start saving for the future. Whether a student loan, mortgage, or credit card bills, do not brush these debts off! Suddenly, you’ll find yourself a 40-year-old with debts that have been mounting for decades! Even worse, with interest rates, every month you wait can put you back many months, or even a whole year! Plus, paying off those debts can help boots your credit score!
Save Up For A Rainy Day
After tacking debt, another financial milestone to complete is to open a savings account – an actually put money into it! After all, everyone needs a rainy day fund, even if you’re the healthiest person on the planet. What if a partner or family member fell ill or someone’s workplace closed down? All of a sudden, you might find yourself strapped for cash, with expenses coming down the pipeline. Alternative, with a savings account and money it in, these problems can become nothing more than minor inconveniences.
Don’t think saving ends with a rainy day fund! No, once you establish an emergency savings account, start saving for retirement. Unfortunately, many do not like discussing saving for retirement. Whether they don’t like the idea of growing old or don’t think they will ever retire due to financial constraints, many put off saving for retirement until its too late. But, even if your IRA or personal 401(k) looks a little empty, it should at least be set up by the age of 40. Depending on income and spending levels, most experts recommend 80% of pre-income salary, multiplied by the number of years that person expects to remain alive, in a retirement account.
Shop For A Life Insurance Policy
Once again, many skip out on a life insurance policy, as they do not want to think about aging or dying. However, life insurance isn’t for you. It’s for your loved ones. After someone passes away, the financial burden of hospital bills, the cost of the funeral, and other items can wreak havoc on the family. Life insurance can help tremendously here. In case there are any problems with heath, an individual might be experiencing, their insurance will cost more. Otherwise, it can be cheaper and easier to buy coverage, especially if it’s for a short term instead of permanent. Application and approval can get some time, though, so plan it before your 40th birthday!
Educate Yourself On Finance
Of all the financial milestones you should reach by 40, educating yourself might be the most important. After all, without education, one will find it difficult to complete any of the steps listed here. Plus, there are many, many wonderful books that will sharpen your financial mind. And, with ebook readers and audiobooks, it’s easier than ever to learn. Online education, whether through YouTube or a professional course, can also help tremendously.
You don’t have to learn and take care of everything alone either! There are plenty of financial advisors to contact when you can’t seem to figure out what to do next.