Establishing a clear money goal is more important than you think because it sets the tone for long-term financial stability.
According to a report, Americans lost an average of $1,389 per person in 2021 due to insufficient personal finance knowledge. This statistic highlights the importance of setting and achieving money goals, particularly as you approach the milestone age of 40 (and far beyond).
Your net worth should slowly rise in your 40s as you prepare for your 50s, when you have your highest potential earning years and want to save robustly for retirement.
Here are 15 money goals that can ensure your financial success before turning 40.
1. Make a Budget
Creating a balanced budget means distributing your money wisely without excessively restricting yourself. Figure out how much money comes in and decide where it should go. Prioritize expenses that need to be paid off first. By doing this, you ensure that you live within your means – not spending more than you can handle and hopefully putting away some savings too.
2. Create an Emergency Savings Fund
Life throws surprises at everyone without any prior notice (and usually at the worst times). An emergency fund prevents you from falling into debt if something unexpected happens. It’s a savings account where you set aside some money from your income to cover your living expenses for three to six months so that you can live comfortably for a few months in case you lose your job or any other emergency.
3. Regularly Contribution to Retirement Accounts
It is suggested that you contribute 10% of your income to your retirement account. It’s okay to start with a smaller percentage if you are at the beginning of your career. However, you should gradually increase your contribution to reach that 10% target before you turn 40.
You deserve to enjoy a peaceful and fulfilling life after retirement, and this is only possible when you have financial stability.
4. Manage a College Savings Plan
If you have kids or are planning to start a family, start a college savings plan right away instead of splurging on expensive kids items.
Research and consider various savings options, such as 529 college savings plans. Moreover, you can also tell your children to explore financial aid options such as scholarships, grants, work-study programs, and student loans to help cover college expenses. While it may be tempting to use retirement savings to pay for college expenses, it’s not a wise idea, so start saving for a better future.
5. Become Debt-Free
If you are in debt due to questionable spending habits, it’s time to get out. Try to create a strategy to pay off debts with higher interest rates first—these are like the biggest rocks in your backpack. As you pay off these debts one by one, you’ll finally see a light at the end of the tunnel. The lighter your backpack, the more money you’ll have for other things, like investing in an emergency fund or your retirement plan.
6. Diversify Your Investment Portfolio
When it comes to investing, diversifying your portfolio means not putting all your eggs in one basket but instead spreading your money across different types of investments, like stocks, bonds, real estate, and more. This helps lower the risk of losing money because when one investment is lost, the others might be in profit, covering your losses. Before making multiple investments, you must ensure that your general finances are in place and that you won’t go bankrupt to maintain these investments.
7. Save for Homeownership
We all dream of having a place to call our own, where we can paint the walls any color we like and truly make them ours (and no one can increase your monthly rate unexpectedly like a rental). To make this dream a reality, start saving from today. First, save for the down payment; it’s the key to unlocking the door to your home. Then, create a budget where you can comfortably fit your mortgage payments. By reaching the goal step by step, you can experience the fulfillment of having your place.
8. Having Multiple Streams of Income
Who doesn’t like having a little extra money in their pocket, not just from their main job, but from some extra activities they enjoy? This is what we call a side hustle, like a partner that brings in more cash. Doing a side hustle is easier said than done. But you can make money from something that you enjoy. Are you an artist? Paint and sell. Do you have good vocals? Sing at a club. Try exploring opportunities outside your main job and diversify your experiences.
9. Keep Your Insurance in Check
You and your loved ones need protection from various uncertainties to ensure your well-being. Keep your insurance policies updated, including life, disability, and property insurance, to protect your family’s future, income, and belongings. Appropriate health insurance must be in place to be ready to tackle any health issues that may come your way, ensuring that you don’t have to worry too much about big medical bills if your health takes a downturn.
10. Estate Planning
Estate planning isn’t just about protecting your assets; it’s also a way to provide for those you care about (spouse, kids, etc.). To start this process, create a will – a special document outlining your wishes, ensuring your belongings find their way to the right people. Additionally, designate beneficiaries for your assets who will look after what you’ve worked hard to build. It’s about leaving a thoughtful legacy, and ensuring your loved ones are cared for, even when you’re not around.
11. Check-in With Your Financial Goals
Life, career, and economic conditions may change, and your financial goals might need some tweaking to keep up. Regular financial check-ins help ensure you’re still heading in the right direction to prevent surprises. Take a look at your goals, see how far you’ve come, and consider if any adjustments are needed.
12. Polish Your Skills and Learn New Ones
Humans can always develop and learn new skills. We must enhance ourselves to prevent being replaced or feeling bored and stagnant with life. Investing in our skills and education can help us become more valuable in the job market and also increase our ability to earn more.
13. Seek Financial Advice
To overcome life’s struggles, one needs a map, reliable companions, and expert advice. Similarly, in financial matters, you might need a mentor who has already been in your position to help you face challenges and conquer them. Additionally, your friends can prove to be helpful. You never know when you might need their insights or when they might need yours.
14. Discuss Finances Before Tying the Knot
Before you decide on wedding gowns and honeymoon destinations, be sure to talk about important aspects of life with your partner, like family planning, career goals, values and beliefs, and money expectations. Make sure you both are on the same page and can handle the finances as a team. After all, money is a crucial aspect of life, and disagreements about it can lead to problems in a marriage.
15. Spend Where It Truly Matters
Remember, you work hard for your money, so spend it on things that mean something to you.
If you like shopping, spend on your favorite clothes and bags. If you like spending time with your family, spend monthly family outings or plan yearly trips to new places. Remember, you work hard for your money, so spend it on things that mean something to you, not just because it’s what you’re expected to do.
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Aqsa is a passionate writer who loves spending her free time jotting down her thoughts. But that’s not all. She is a devoted mom to two boys and a skilled pharmacist specializing in hematology. When she’s not running after her energetic kids, you can find her lost in a good book or writing beautiful words. A nature lover at heart, she enjoys exploring the outdoors, staying active, and always seeking ways to learn new things.
