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There’s a reason why people say your forties are the best years of your life. The big things like marriages, mortgages and having kids are out of the way, you’ve climbed the corporate ladder and are entering into your peak earning years.
You have more time, more freedom and more money than ever before to live the life you’ve been working hard for since your early twenties.
And although you shouldn’t feel guilty about treating yourself to the cars, houses and things you deserve, it pays to be wary of inflating your lifestyle just a bit too much.
Once you’ve had a taste of the good life, it can be very easy to go overboard on the spending and running the risk of doing irreparable damage to your finances. To avoid this, here are 7 finance mistakes to steer clear of in your 40s, without sacrificing your quality of life.
Thinking it’s too late
When you get to your 40s it can be easy to think it’s too late for you to start putting away money for retirement – especially when all the pension advice is geared towards those in their twenties and thirties who have decades ahead of them.
But realistically, at the age of 40, you still have at least another 25 years of your career in front of you. That’s plenty of time to start putting money away that will amount to a considerable sum over the next few years.
Saving like you did in your twenties
If you’re one of the sensible lot who’s been saving since their twenties, you probably feel fairly comfortable with your financial future. But there’s always more you can do to enhance your security. As you’re likely to be earning more than you did in your twenties, consider increasing your contributions to your pension or various saving accounts, rather than simply spending that extra cash. Although it might be nice to do up the kitchen, your future self will thank you for saving more instead.
Not repaying your debts
Similarly if you have debts or loans that are still outstanding in your forties, focus first of all on clearing these before doing anything else. Not only will this take a weight off your shoulders but will provide you with a nice clean financial slate where you can focus solely on saving instead.
If you have a lot of debts to repay, set a goal of being debt free by 50 and create a realistic plan you can put into action to make this happen.
Getting complacent in your career
If you’ve spent your twenties and thirties working tirelessly and aggressively on advancing your career, by the time you get to your 40s, it can feel like you’re due a bit of a break. However, if you feel like you have more earning potential or could change jobs to increase your salary further, you should do it.
Earning even just a little bit more per month, to put towards your savings can make a noticeable difference to your retirement fund.
Putting the kids through college
For those who had children in their twenties, the time is now coming to start thinking about their future; whether that’s going off to college, going travelling or getting stuck into their career.
And while we all want to do what we can to support our children and make life easier for them, don’t fall into the trap of spending all your savings or more than you can afford. Talk to your children about what their plans are and be realistic about how you can offer support.
Upgrading your home
If you’re lucky enough to have bought a house in your twenties or thirties, by now your mortgage may be paying off nicely. And while the thought of upgrading, remodelling or doing up your home may cross your mind, you should think twice about putting new floors down or fitting a new expensive kitchen. By all means, make the necessary improvements to boost the quality or living conditions in your home, but don’t do it at the expensive of your savings or retirement fund.
Investing too aggressively or too conservatively
With a higher salary, more financial security and freedom than ever before, your forties are the decade to start getting serious about investing if you haven’t done so already. When it comes to investing, choose a strategy that suits your risk tolerance and your bank balance.
Don’t make the mistake of being more conservative than you need to be with your investments, but on the flipside, avoid taking more risks than you need to.
In any case, you should speak to a professional who will advise you on the best investment strategy for you personally. A great place to start is by visiting Irish Life’s Investment Hub. Here we have some great tips and guides for everyone regardless of their investment experience and you can get in touch with one of our advisors who will be happy to take you through our various investment products.
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