40 Financial Things You Should Know by Age 40

Too old to be financially clueless, too young to be tapping into your retirement savings. Here's what you should know by 40

by Alden Wicker • LearnVest.com
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Photograph: Taina Sohlman/Shutterstock.com

Many by-40 milestones have become debatable: Get married? Only if you really want to. Own a home? If it’s financially feasible. Know what you want to be when you grow up? Well, if 40 is the new 30, you’re certainly entitled to change your mind. But there’s one thing that’s nonnegotiable: By age 40, you can’t get away with being financially clueless anymore. Especially since retirement might be a lot closer than you think! We’ve put together 40 money things, big and small, you should know before you turn the big 4-0. Why? So you can help achieve your financial goals with plenty of time left over to enjoy them!

1.    The three basics of a solid financial foundation. Credit card debt paid off.Emergency fund stocked up. Retirement account(s) in existence and growing.Everything else (travel, homeownership, investments) should come after. 

2.     How to create a budget. Because without one, you may not reach any of your goals, like buying a home, paying off your credit card debt or traveling the world. Learn how to build your budget with our step-by-step guide.

3.     How much you should be saving. The answer: 20%. Not sure how we arrived at this number? Look no further than the 50/20/30 rule, which divvies up your monthly budget as follows: 50% is reserved for essentials (think mortgage, rent and groceries), 30% is allocated for your lifestyle choices and at least 20% goes to “financial priorities,” which includes your debt payments, your retirement contributions and your savings. Here’smore detail on the why and how of saving a fifth of your paycheck.

4.     Your net worth. Yes, you have one. This is the sum total of your assets (bank account balances, savings, investments, etc.) minus your debts (loans, mortgage, credit card debt, etc.). Your net worth is the easiest way to get a big-picture perspective on your finances. Want a quick way to figure it out? Link your accounts in the free LearnVest Money Center, and we’ll do the calculating for you.

5.     How much you make and how much you spend each month. It sounds like a no-brainer, right? “But most people, regardless of their age, don’t know how much money they have coming in and going out,” says Natalie Taylor, a CFP® with LearnVest Planning Services. For a full breakdown, visit the Money Center to see your incoming versus outgoing finances.

6.     How to get out of debt. Now is the time to be saving for your future, not paying off your past. Hopefully your debt repayment efforts are already in full swing, but, if you’re not there yet, now’s the time to make a plan. Here, a quick checklist to help you. Want the big kahuna? Get Out of Debt Bootcamp is our three-day, in-depth plan to help you finally live a debt-free life.

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