For Your Benefit

What Everyone Needs to Know About Money – Before Turning 40

April 22, 2024

What Everyone Needs to Know About Money – Before Turning 40

By: Site Owner

Published: April 22, 2024

Author: Kaitlin Schaeffer Yardley, CFP®

Turning forty is often associated with over-the-hill, but it is also a time to reflect on the knowledge gained by reaching this milestone.  If knowledge is power, then by the time we reach forty we have learned some pretty powerful lessons. When it comes to making smart financial decisions, the earlier we apply certain practices the better.   If you can apply these practices sooner rather than later, your financial picture will be on the right track…well before you turn the big 4-0!

  1. Zero Debt Policy.  If you use a credit card, pay it in full.  Every. Single. Time.  If you have outstanding balances, doFinancial Literacy on Blue Puzzle whatever it takes to pay them off ASAP.  Overwhelmed?  Get help from a nonprofit like Consumer Credit Counseling Services. 
  2. Avoid lifestyle inflation.  As you make more money it’s ok to spend more money but be thoughtful about it.  Have an extra dollar?  Putting half toward spending and half toward investing is a winning strategy.  Make sure you are measuring success and progress against your own goals (not the lifestyle of others). 
  3. Boost retirement contribution.  Until you hit the IRS contribution limit ($23,000 for 2024), there is no better way to build wealth than in a retirement plan.  Even if you need to reduce contributions in the future when life hits an expensive speed bump, the money already invested keeps working for you.
  4. Don’t overthink investment strategies.  Keep short-term money out of the market (the money you need in the next few years), and long-term money invested in the market.  We expect market values to go up and down and can’t panic sell in reaction to that!
  5. Life insurance is not an investment.  If you need life insurance, stick with term life insurance.  Other policy types, like whole and universal life, are significantly more expensive and offer features you don’t need. 
  6. Understand home ownership.  It’s great to build wealth by owning rather than renting, but only buy when you are unlikely to move for several years.  The cost of buying and selling can be prohibitively expensive.  Just because you get approved for a mortgage doesn’t mean you can afford the payment and keep your current lifestyle.  And let’s not forget the cost of home maintenance – it never ends.
  7. Estate planning documents are required.  Everyone needs a will, power of attorney and healthcare documents.  There is a good chance you need a trust too.  Call a lawyer and make the appointment.  Also be sure to double check your retirement account beneficiary designations.  Regardless of what your estate documents say, the beneficiary listed on the form is who the account will go to. 
  8. Be generous.  Money doesn’t buy happiness, but sharing money does.  Whether giving now, or making plans through your estate, we all benefit from thinking of those in need.

Kaitlin Yardley is the Chief Compliance Officer for Schaeffer Financial, LLC, a financial planning consulting firm located in suburban Washington, D.C. She received her CFP designation in 2008 and earned a B.A. in Finance from the University of Dayton in 2003. Kaitlin has been advising clients for over 10 years and has been teaching for the National Institute of Transition Planning since 2017 on a variety of topics, including Financial Planning, Appropriate Use of Debt, Investment Basics and Preparing for Financial Emergencies.  

This newsletter is designed to provide information on the subjects covered. NITP, Inc. takes great care to insure the accuracy and quality of these materials which are provided without any expressed or implied warranty, including, but not limited to, their fitness for a particular purpose. They are also provided with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, financial planning or other professional service. If additional assistance is required, the services of a competent professional should be sought.

This entry was posted in News, Uncategorized on April 22, 2024 by Site Owner.



Leave the first comment