Building wealth isn’t impossible, even if you’re starting “late.” Young people are indeed saving earlier than previous generations. Does that mean people in their 40s can’t catch up or get ahead? Building wealth in your 40s is possible: Here’s how:
You may not realize it, but your 40s are a great time to build wealth. In many ways, it’s easier to create your fortune at this age. That’s because…
By now, you probably have some savings or assets to your name. Compared to where you were at age 20 or even 30, you likely are starting further ahead. Depending on where you are financially, you don’t have to save as aggressively and focus more on investing.
Ideally, you should have about three times your annual income saved up by age 40. If not, then that’s alright, because by now…
It’s hard to save money when you’re on an entry-level salary with staggering student and auto loan payments. By now, you likely have quite a bit of career experience under your belt. If this is the case, then you have access to better pay. Having a higher income means saving money and paying off debts will be easier.
At this stage of life, you likely already know whose opinions you should value. That means you’re less susceptible to spending money just to impress people. Unless, of course, you go through an expensive mid-life crisis (I highly advise against this).
Your 20s were a time for finding yourself. You likely didn’t know what you wanted in life, who you were, or who you wanted to be. By now, with a few more decades’ worth of life experience, you likely already have some life goals to achieve. That also means you have the wisdom to know what you want and don’t want in life.
You probably already know the saying “life begins at 40.” It might be a bit overstated, but that’s only because it’s true! The first 39 years of life were for you to make mistakes and learn from now. By now, you likely know how to avoid making those same mistakes and spend your money on what really matters. Things like family, a house, and a life that you want to live.
You might feel pressured to be able to retire early. While there are certainly benefits to being able to enjoy your 50s, there’s nothing wrong with retiring at 60. After all, that’s been the norm for decades! You can enjoy your retirement in 20 years by following these tips to build wealth in your 40s.
If you don’t already have a financial tracker, it’s time to get one! Trackers help you monitor your budget, spending, and finances in general. By actively managing a money tracker, you’ll always be on top of your finances. This helps you make healthier financial decisions when building wealth in your 40s.
If you have a partner, some budgeting apps are made for couples! Check out my article to learn more about the best budgeting apps for couples.
Debts grow larger the longer they haven’t been paid off because of interest. Ideally, you should have paid off all of your debts by now. If not, then you should work on paying them off before they get even bigger.
Don’t know how you’re going to pay off your debt? Dave Ramsey, a financial expert, has a few steps to help eliminate it. Check out my article that breaks down his debt elimination plan into baby steps.
By now, your salary is likely much larger than it was at the start of your career. This means you should be able to save a little bit more money into your savings account every month. Ideally, you should have about three years’ worth of your annual income saved up. Saving aggressively helps you get to this magic number as soon as possible.
You should only save up to a point where you feel comfortable. Once you have enough savings, it’s time to move from saving your income to investing it. This lets you make your money work for you and earn potentially lucrative gains through investing.
Want to learn more about investing? Check out some books written by some of the greatest financial minds. My reading list has some great suggestions for your next bookstore haul!
Actively managing your investment portfolio is part of building your wealth in your 40s. You should always strive to have a balanced portfolio, so you’re not maximizing gains and minimizing risk. You should diversify your investments between stocks, index funds, crypto, and more. Keeping “all of your eggs in one basket” may sound good in theory, but it’s a recipe for disaster.
If you’ve ever been given a raise and still struggled with money, you’ve likely faced lifestyle creep. This happens when you increase your income but live a more expensive life. Avoiding lifestyle creep is challenging, but you can beat it if you learn to be content.
Building wealth in your 40s is much easier if you have multiple income streams. You’ll be able to save and invest a lot more money when you’re bringing in more money. Some examples of additional income streams are side hustles and investing in dividend stocks.
You should spend your money, within reason, on things that you’ll use often. For example, if you value your physical fitness, it’s okay to spend more on a gym membership. This is another form of investing that people overlook too often.
According to CNBC, nearly 40% of women over the age of 35 regret not saving or investing sooner. If you fall under this percentage, don’t fall into the trap of thinking that it’s too late to start investing. It isn’t–and it never will be. Instead, you should take your regrets as motivation to catch up and get ahead in your 40s.
It’s never too late to start building wealth, especially in your 40s. You can learn something new daily to create wealth more quickly. One of the ways to learn is by taking the quiz to see how you can start building wealth today!! You’ll have exciting money tips and insider information sent weekly as a member! The best part? It’s completely free and takes just seconds to sign up–so join the money squad today!
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Dollars Makes Cents by Shaquana, Financial Coach and Wealth Expert, resources helps professional millennial women of color with the tools and skills they need to eliminate their debt, amplify their savings, and build generational wealth — without having to compromise their lifestyle.
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