“Life begins at 40” is a well used maxim. If you are turning 40 soon, this is the perfect time to begin planning for your retirement financially.
Every money decision you make now will have an impact. Take a look at these five tips to see if you are heading in the right direction, then speak with an Accru financial advisor.
Going into your 40s, you should start eliminating debt you have accumulated in your 20s and 30s, especially high interest debt. This includes paying off credit cards, motor vehicle loans, even trying to get better deals on expenses such as your internet or phone bills.
Be smart with use of your credit cards
Pay off your credit cards, but don’t discontinue using them. If you have enough discipline, using a credit card for day-to-day expenses can bring in benefits, like earning travel points, rewards or cash back. For this to be successful though, you must ensure you pay off your credit card spending each month to avoid interest charges.
Savings, savings, savings
Going into your 40s you may have built up your savings account although this isn’t always the case with children’s expenses. Paying off and reducing debt will allow you to start putting aside money instead of using it to pay off debts. Ideally having at least three months expenses saved is a good buffer. Consider increasing your super contributions too.
Avoid lifestyle inflation
As you will most likely be earning more than you were in your 20s and 30s, it is easy to start spending more as well. It is important to remember Tip 3 and save first, spend second. Set a budget and plan to accommodate your needs, and set aside a percentage of your income to go into your savings account.
Reviewing your super and retirement plans
Investing tax-effectively in superannuation over the long term can help secure your financial future for retirement. It’s important you have the right strategies in place. Please ask your local Accru office for an obligation-free consultation to discuss your particular situation.
By Jessie Henderson & Daniel Richards, Accru Hobart