How to #SLAY your 40s: Succeed with money
Woohoo! You turned 40! Happy birthday and congratulations! Your life is a miracle, not many get to this milestone.
Sometimes we are so focused on analysing what we should or shouldn't be doing at 40 or what we should have done by now that we don't take time to breathe, relax and show gratitude for where we are right now.
“The glass is always half full! The way to see your finances is 100% dependent on your money mindset”
We sometimes want what other people have without appreciating all the things going well for us.
We all have our individual life's race and when it comes to our finances it's important to remember it's not a competition. We all #slay in our lanes.
But if your finances needs some work, the best part of fixing your finances in your 40s is you still have plenty of time before retirement AND on average -less financial responsibilities.
Your kids are getting older and can now babysit each other! Bye bye, high childcare fees.
All you need is a change your perspective
Here are FIVE ideas to fix your finances with what you already have access to, it may not work for everyone, but it could get you to start thinking creatively about your money x.
Rent out their room in the meantime...
Maybe some are approaching university so you might soon get a free room you can rent out also Kaching! My good friend did this when both her daughters went off to university and she made enough to cover her mortgage repayments.
Double down to ditch Debt
Also, you have probably been working for a while and earning higher than when you were in your 30s and 20s, so you can double down to tackle any outstanding debt you have and wave debt worries goodbye.
You can get help with kids uni fees by..
If you are making use of the tax-free junior ISA for your kids, consider using a stocks and shares ISA which will provide a better return than leaving the savings seated in cash in a junior ISA. The interest you will make from compounding could help support your child during university.
You can start investing
It is also a good time to look into investing towards your retirement. With the retirement age rising all the time, 30 years (i.e. 70 -40) is a very long time, and if you start now, you could grow a sizable pension pot effortlessly.
You should be paying less interest on...
You may also have a mortgage, car loan, and maybe personal loans.. the good news is that when you hit 40, you are seen as less of a financial risk than when you were younger. So it is a great time to try and renegotiate your interest rates on your repayments. It's vital that you don't pay more interest than you need to. So call up the financial houses and ask them to improve your interest rate.
Start saving to invest. Don't wait till all lower interest debt is paid off. Once you have some emergency funds saved everything extra should go towards paying off your high-interest rate debt and investing towards retirement.
5 Top tips for saving towards retirement
Aim to save for 15-20% of your salary. If you can not afford it, start with what you can afford
Check to ensure you will qualify for a state pension, i.e., That you will have worked and paid N.I. for 35 years.
High tax earners can reduce the tax they pay by increasing their workplace pension contributions which are tax-free. Tax-free you can not withdraw this money before you are 59.
Open a stocks and shares ISA and invest here for retirement or mid-term goals that are 5 to 15 years away. This is because you can access the money in this investment at any time. The first £20000 you invest is tax-free.
Make sure you know how much you need to contribute now to have the retirement income you want later
So, How much should you save?
For a comfortable lifestyle paying £29000 a year without any mortgage repayments Which.co.uk retirement guide suggests, you should start contributing a minimum of £487 per month towards your pension. This will give you a pension pot of around £206,500 by the time you retire.