Your 40s are typically some of your peak earning years. So how do you make the most of them? Here’s our top 5 money mistakes to avoid in your 40s.
All your wealth in property
Many people in their forties have paid down the mortgage on their house and seen their salary go up, and are looking to put the excess money to work.
This is where a global investment fund can help you. An international fund invested in company shares and bonds is a great way to diversify your wealth away from the Irish property market. (Moneycube can help with this).
If you are looking at increasing your investments, don’t bet the farm on a single kind of asset.
No plan for third-level education costs
Free third level education is a bit of a myth in Ireland.
To start with, there’s a student contribution charge of €3,000 to think about (to be fair, the State is paying €1,000 of that in the current year as a cost-of-living-crisis measure). Then there’s the living expenses, particularly if your son or daughter is moving away from home.
Zurich Life have recently put the annual cost of sending a child to college at more than €15,000.
Too much mortgage and other debt
Your fifth decade is a good time to make big inroads on your debts.
Your earnings have hopefully gone up, and if you’ve kids, the worst of childcare costs might be behind you.
For many in Generation X, it’s a good time to plough that extra bit at the end of the month into paying down debt – especially expensive debt like credit cards, bank overdrafts, or high-interest personal loans.
No life assurance
If people around you depend on your income and your future income, you almost certainly need a plan to replace it if you get sick or die. That’s where life assurance comes in.
For most of us, there are two scenarios to think about protecting against in particular. Firstly, there’s the risk that you might become unable to work – for example for physical or mental health reasons. You’ll still need an income however. And if your work doesn’t offer any protection in connection with this risk, it’s well worth looking into putting provision in place yourself.
Secondly, it’s a grim thought, but the financial consequences if you die can have a huge effect on those around you. Many in their forties have people depending on their income, and it’s important to consider how things would change for them if that income stopped.
Pension: reality check
In your forties, you’ve got time to make a real dent on your pension fund.
By piling in cash steadily now, your money will benefit from around two decades of investment returns. And between the ages of 40 and 49, Revenue allow income tax deduction against up to a quarter of your income.
Lastly, remember everyone’s circumstances are different, and this is not a comprehensive list of money mistakes to avoid in your 40s. Get in touch if you’d like to discuss how Moneycube can help you get a financial all-clear.