Three tips to help you fix your finances in your 40s

People spend so much time trying everything except investing to improve their financial lives – hunting for discounts, trying different budgets, cutting back on every tiny expense. Investing will have a far bigger impact longer term than all those things combined, with way less effort as well.

2. Start getting ahead of unexpected life events

We feel shocked when the life’s unpredictable, but often very natural, happenings crop up. It disrupts the pattern of normality we have become used to over the years.

Maybe your once healthy parent is now in hospital. Maybe you’ve had major unexpected life changes – a loved one passing or divorce. It can feel like, “I thought I had more time” or “I didn’t think this would happen to me.”

While it can feel unnecessary and depressing to think about, a little planning can make these unpredictable life events a little less stressful.

Here are a few things you can do, that a future version of yourself will thank you for:

• Get your estate planning affairs in order (and get your parents to do it too): this means arranging your will, have a binding nomination for your superannuation funds, assigning a power of attorney and enduring guardian to assist with financial and medical matters if you lose capacity.
• Review your personal insurance needs: What would happen if you suffered an illness or injury and were no longer able to work? How would your household continue to operate financially? Do you have the insurances (trauma, total and permanent disability, life insurance, income protection) to get you through such events? We all like to think that “it won’t happen to us”, but if it did, would you be prepared?
• Start the tough conversations: How will your family deal with the aged care needs of your parents if something were to happen? What major changes is your family likely to undergo in the next 10 years? These can be difficult conversations, but it’s better to start them early than to wait until it’s happening in the middle of a high-stress situation.

3. Stop living on autopilot

The humdrum of life has a way of lulling us into a state of autopilot. You get used to doing the same things every day – going to work, sitting in meetings, scrolling on your phone, dreading tomorrow, repeat.

It’s easy to let the years slip by without thinking about what direction your life is heading. So, think about it – are you just living out decisions that a younger version of you made, but are no longer a good fit for the life you want?

If you keep living the life you’re living today, will you like where you’ll end up 10 years from now? If not, what needs to change?

If you keep living the life you’re living today, will you like where you’ll end up 10 years from now?

Most financial decisions are just life decisions with a price tag on it. Getting clear on what life you really want to be living is necessary to make good quality financial decisions. Without this, you’ll spend a lot of time and money on things that don’t really matter to you.

Your 40s are a great time to start making intentional choices to move your life in a different direction. A few small changes today can have an enormous impact on the life you’re living just a few years from now.

Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest their money through financial education courses and classes.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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