In some ways, a certain kind of calm comes over you when you hit 40. You feel more confident. Life is calm and stable. You don’t plan to retire any time soon, but you have some major investments paid off so the bills aren’t as bad as they used to be.
As you dwell on how calm life has become, you may start to feel a notion that it’s time to shake things up because that calmness also brings up the question of why life is so calm. All of a sudden you might become tempted to take risks you wouldn’t have otherwise.
Financial Mistakes in your Forties
Before you do anything drastic, review some of the financial mistakes you might be tempted to make in your 40’s.
1.You splurge out of sheer panic. For some reason, 40 can make you feel like you have limited time to try all the fun things you wanted to do. In fact, as you get older, this is a pretty consistent theme. Don’t go into debt or take unnecessary financial risks based on the fear that you have let life pass you by.
2.You quit your job. That calm becomes unrealistic confidence. Yes, you probably have been doing your job for quite some time and if it weren’t for things like insurance, you very well may be able to get another job anywhere you wanted to. However, companies are going to avoid paying into your retirement if they can and they certainly aren’t all that eager to hire someone who has more potential to be a medical liability than someone half your age.
3.You consider taking risks with your retirement funds. Right about now you’re thinking that you are probably going to be working for another 20 years so you have plenty of time to save. Why not spend some of that retirement savings on a remodeling project or a new car? Don’t do it because while your home may increase in value, the market is not in a good position so you aren’t looking at a better sales price. You’re just looking at higher taxes. The car is most certainly going to drop in value. If anything, increase your contribution to your retirement plan now that some of your bills are paid off.
4. You think now is a good time to invest in your education. No, it really isn’t. If you were 20, then yes it is. At 40, you have enough experience to supplement your lack of education. If you can get a grant and add to your existing portfolio, great. However, now is not the time to start over and go into debt with student loans.
5. You’re putting your money into all the wrong things. Hopefully you have paid down your debts. If not, now is the time to do it. You don’t want to hit 50 and find that your assets have all been seized. The kids may be grown and you may be feeling like you have some financial freedom, but be smart about it. Pay your debts and put money into your life insurance or retirement plan.