Best Money Moves in Your 40s

It’s time to think strategically about your money and your career. Elaine King, CFP®, shares her advice on both.

Written by Elaine King CFP® / April 8, 2022

Quick Bites

  • A smart money plan in your 40s should include a budget for life-enriching activities, like travel.
  • Take the time now to plot out what your future looks like career-wise.
  • Explore ways to grow your money and accelerate your savings.
  • Plan for 15 or more years in retirement.

The best money move I made in my 40s was to resign from my 20-year corporate job. To the untrained eye I looked confident and resilient, but honestly I felt like the floor where I was stepping disappeared overnight.

My father, an ex-Fortune 500 CEO, referred to me as “unemployed,” my mother kept sending me financial job opportunities and my husband could not make sense of my decision.

The reality is that once you work for a wonderful corporation with benefits and a steady paycheck, the thought of doing your own thing seems unrealistic. There is a sense of security that your work is being somehow monitored and curated, and that if you keep going another 20-plus years, you will be able to comfortably retire to your cottage by the lake.

And this is 100% valid. However, that system was designed for people to retire and live for a short time, but we are destined to live for at least 15 years past that system, so we must plan and focus on things that challenge us and empower us.

So what are the money moves that I recommend you make in your 40s that may come in handy to you? Here they are below (you will thank me later).

Inside this article

  1. Write a travel bucket list
  2. Imagine being an entrepreneur
  3. Money vs. assets
  4. Think of a bigger number

Write a travel bucket list

Traveling keeps your spirit young and opens your mind. For me it’s important to have the freedom to travel around the world. I take advantage of low-season hotel rates and airline tickets, and tours with fewer tourists around.

It is also important to spend enough time to enjoy my family in these adventures and not get weird looks around the office when I come back. Or feel the fear that I could have missed an important restructuring conversation while I was away.

My advice: Pick three places you would love to see in the next three years and make a plan to visit them, write down the tentative dates, the amount it will cost you and start a savings plan to have this fund outside of your daily budget. Consider three trips in coach versus one in first class, Airbnb versus a luxury hotel and traveling in the off-months versus high season.

Imagine yourself as an entrepreneur

Whether you decide to stay at your corporate job or start a new venture, it is important to think like an owner and keep generating sources of income for a bright future.

Corporations are amazing places to learn and share your expertise. However, when it comes time to decide between the business and you, guess whom they will choose? No one is indispensable, so you must start building a contingency plan for that day when you may lose your job. And it may come in your 40s, especially now that technology is advancing so fast; your position can be consolidated due to a merger, it can be outsourced due to globalization, or it can be automated due to artificial intelligence.

Your employability in your 50s will be less appealing to headhunters, so start to build your expertise to the outside world today.

Differentiate between having money and owning assets

Some people I know have very nice cars and luxurious tastes, but still rent and keep high credit card balances. Others barely buy new clothes, shop at discount stores, have a small house and no mortgage.

Even though your money moves will depend on your personal taste and preferences you must keep in mind that assets will produce cash flow in the future and when cash flow goes dry it is your assets that will provide for you to keep up with your standard of living.

Most of us start with zero dollars in the bank, but as we start making money and using it to pay bills, some will start saving the residual and few will put these into a separate account. For these savings to convert to assets one must buy something that produces more money such as investing for growth in a portfolio, buying investment properties or land, and building a business or two. Focus on converting your cash into assets in your 40s.

Think of a bigger number than the one you have in mind

The future is uncertain and inflation is here to stay for a while along with high interest rates. Economic cycles come and go, but one thing is for sure, you are halfway into your most important earning years and deciding how you will make it will be crucial to the quality of your life for the next 20 years.

There are several ways you can figure out the math for your financial independence. One way is to plan for interest or growth from your money; for example, targeting a 5% growth. Another is to plan for the total amount you’ll need; for example, save enough for 20 years of your current salary. The last one is the FIRE method, where you start adjusting your savings on a yearly basis so you can get to your goal faster. Experts say on average you will need about $1 million in assets. I recommend aiming for 25% more at least, so that if you come up short, you will still hit the $1 million target.

As some people say, your 40s is your new 30s, so plan your money moves aggressively so you can plan your retirement years accordingly, in order to enjoy them ahead of schedule and in perpetuity.

About the Author

Elaine King

Elaine King CFP®

Elaine has served as the Family’s Financial Planner for over 1,200 families and 100 multigenerational family enterprises crafting actionable family financial plans.

Full bio

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