As with many milestones in life, people will have an internal expectation of when to achieve things by. This is especially true when reaching certain ages as you will find it hard not to compare yourself to others. When it comes to your finances, there are many things you learn over the years and by the time you reach your 40th birthday, you’ll want to have many of your goals ticked off. Here are some financial goals to have, and hopefully successfully met, by 40.
Have a good level of credit
It can take time to build a good credit score, especially if you have had financial difficulties in the past. Whilst you may have affordability now, it can take a while before your credit rating reflects this. You can find low credit score loans if you are in this situation and need to borrow for the short term, such as resolving a financial emergency. Long term, you will want to be in an overall healthier position with your credit score. If you want to own a property, for example, you’ll need a good level of credit, so maintaining repayments and avoiding issues on your bank account will help you get there.
Have savings and investments for retirement
Building savings is something many people want to do, and by the time you reach 40, you should have a substantial sum saved. Starting as early as possible and buying only things you really need should help to grow your savings. Not only that, but by 40 you’ll need to have a good pension pot if you are looking to retire in your 60s. Having a mixture of savings and investments should be a goal and will help create financial security towards retirement. Plus, having emergency savings to cover the unexpected should be in place to help in case of poor health or being made redundant.
Be financially literate
Financial matters can be confusing at the best of times, especially when you are young and yet to have a mortgage, investments, or any form of borrowing. By the time you reach 40, you will want to have a good understanding of most financial products and how to manage your money. You’ll have a good understanding of interest rates, what types of loan or savings accounts are best, and how to avoid falling into financial difficulty. Of course, you won’t need to know everything, but understanding the most common aspects will be crucial by this time.
Be relatively debt-free
Most people will have some form of debt to repay during life, but by 40 you’ll want this to just be a few essential things. Products like a mortgage will generally span for 25+ years and are unavoidable unless you are happy to rent. You may require a car for example too, or have a lifeevent like a wedding you need to pay off. Whilst being completely debt-free is difficult, you will want to at least not have store card debt, credit card debt and other forms of borrowing used on non-essential purchases. Minimising this as much as possible by 40 can help you concentrate on adding to savings and maintaining essential bills.