13 things to accomplish with your money before 40

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13 things to accomplish with your money before 40

Everyone’s allowed a few life mulligans, but by the time you’ve hit the big 3-0, you should have sorted out most of the reckless habits we tend to fall into as young 20-somethings.

This is especially true for money matters, considering you’re close to entering your peak earning years. According to Payscale, college-educated men’s earnings peak at an average age of 48 and women’s earnings peak at 39.

To prepare for your peak earning years, here are 13 milestones to aim to achieve before hitting 40:things to accomplish with your money before 40© Chris Jagers/Flickr


Contribute at least 10% of your income to a retirement account

You should already be contributing towards your employer’s 401(k) retirement account, and your 30s are a time to increase that contribution.

Many experts recommend putting aside at least 10% of your income. That may not be possible when you’re first starting out your career, but it’s a good goal to have by 40.

To work your way up to 10% of more, get in the habit of upping your contribution on a consistent basis — either every six months, at the end of each year, or whenever you get a pay raise.Contribute at least 10% of your income to a retirement account© Strelka Institute for Media, Architecture and Design/flickr


Invest in something other than your retirement savings plan

Many experts recommend using investment vehicles in addition to your employer’s retirement plan to ensure that you’ll have enough to fund your golden years.

If you’re maxing out your 401(k) plan, consider contributing money toward a Roth IRA or traditional IRA, research low-cost index funds — which Warren Buffett recommends — and look into the online-investment platforms known as “robo-advisers.”

Of course, you’ll want to make sure that your general finances are in order before you invest. But if you have a sound emergency fund, have prepared for future expenses, and are debt-free, then the quicker you put your money to work and jump start its growth, the better.Invest in something other than your retirement savings plan© Strelka Institute for Media, Architecture and Design/flickr


Save for a home

If you plan to buy a home, it should be one of your savings goals. Ideally, you’ll want to have saved enough to make a 20% down payment — anything lower and you will have to pay for private mortgage insurance (PMI), which is a safety net for the bank in case you fail to make your payments.

If you’re thinking about purchasing a home in a major metro area, take a look at how much you need to save per day to put 20% down on a house in major US cities, and see how to make sure you’re buying a home you can afford.Save for a home© Sam Brodfuehrer/flickr


Establish wealth goals

In addition to savings goals, you’ll want to establish goals for your annual income and net worth.

Money won’t just appear — you have to work at it. If you want to eventually build wealth, you have to have a clear and specific goal in place before forming a financial plan to achieve that goal.

Be realistic when setting a time frame to attain these bigger wealth goals, but at the same time, think big and don’t be afraid to challenge yourself. A distinguishing characteristic of rich people is their commitment to setting high expectations.Establish wealth goals© Jason Doiy/ Getty


Buy the insurance you need

Nobody wants to deal with insurance — it’s complex and confusing — but by 40, you should have the coverage that’s right for you.

That means health, renter’s (or homeowner’s if you have your own place), auto, and disability insurance. And depending on your situation, it may mean life or pet insurance.

It’s also smart to make a habit out of reevaluating your insurance plans each year to ensure that your coverage is still working for your needs and budget.uy the insurance you need© Flickr/Barney Moss


Experiment with a side hustle

It’s easy to focus on cutting costs and forget about earning, but the wealthiest, most successful people develop multiple streams of income.

Earning more money is often easier said than done, but most people have options. Read about 50 ways to bring in additional income, some high-paying jobs you can do on the side, how you can earn passive income, and how to start a side hustle from a woman who earned up to $4,000 a month on the side.

Plus, it’s good to experiment with being your own boss, rather than working for your money. After all, that’s the significant difference between how rich people and average people choose to get paid.xperiment with a side hustle© Zach Dischner/flickr


Invest in yourself

The wealthiest, most successful people are constantly exercising their brains and looking for ways to continue learning long after college or any formal education is over.

Self-educate by enrolling in a course, attending a work-related conference, or investing in books. On a similar note, invest in your health — consider pursuing an appealing form of exercise, or anything else that will better your health and strengthen your mind.Invest in yourself© mariadelajuana/flickr


Take full advantage of your employee benefits

If you’re not taking full advantage of your employee benefits, you’re leaving money on the table.

It’s worth it to put in research and talk to your human resources department to understand the scope of what’s available to you, from healthcare flexible-spending accounts to commuter benefits and fitness reimbursement programs.

Many employers have a three-week long open enrollment period — generally in the fall — in which many of these benefits are available to select, so it’s important to be aware of your company’s enrollment window.Take full advantage of your employee benefits© Strelka Institute for Media, Architecture and Design/flickr


Have the money conversations with your partner

If you’re tying the knot in your 30s, you’ll want to make sure you’ve talked through the practical side of things … and that means money. After all, arguments about money are a leading predictor of divorce.

Read up on essential money conversations to have before proposing and how to build wealth as a couple.Have the money conversations with your partner© Thomas Lohnes/Stringer/Getty Images


Start a college savings plan

In many of America’s top colleges, the total cost for the academic year tops $60,000 and is only getting more expensive. Like most financial goals, the earlier you start saving, the better. Plus, time has a way of flying by, and before you know it, you maybe partially responsible for a hefty tuition bill.

If you choose to start a family, rather than splurging on pricey strollers and designer baby clothes, redirect that money into a 529 savings plan, a state-sponsored, tax-advantaged investment account.

That being said, you’ll want to make sure you’re on pace for retirement before you start setting aside money for your children’s college.Start a college savings plan© Getty Images/China Photo


Revisit and adjust your investments accordingly

You can’t just “set and forget” your investments forever. Life happens, and there are times — particularly big life changes — when it’s smart to make financial adjustments.

For example, if you decide to retire early, you’ll need to readjust your time horizon and the amount of risk you choose to take in your portfolio.

As your money grows, and as you get closer to the end of your time horizon, the original portfolio you created may no longer suit your needs. Revisit it every year and adjust it to fit your current situation, if needed.Revisit and adjust your investments accordingly© Strelka Institute for Media, Architecture and Design/flickr


Draft a will and create an estate plan.

There isn’t one set time to start estate planning. It’s very situational, but typically there are “trigger events” — big life events such as getting married, having kids, and buying a first home — that signal it’s time to start putting together an estate plan.

A good start is to make a will, which is easier to do than ever before, thanks to sites like RocketLawyer and LegalZoom that offer will-making services at affordable rates. Next, you’ll want to have a living will and durable power of attorney.

In addition to tapping into online resources, you may want to consider finding an estate planning attorney for guidance.Draft a will and create an estate plan© Shutterstock

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