Financial goals are those that you strive to achieve with your hard earned money. While there are financial goals that most people set every year, we are highlighting a few financial goals that we feel every one should keep in mind by the time they approach the big 4 – 0. When you hit 40, you have little time to lose. Its usually the time when most people are already half way into their earning careers, have a family to take care of, parents have retired, and when commitments like children’s education, home loan/ personal loan repayment need to be managed. So what does the financial to-do list look like when you are 40?
managed. So what does the financial to-do list look like when you are 40?
1. Securing A Home For Yourself
Owning a home is ranked as one of the highly ranked goals for almost every Indian. Given a preference of renting or owning a home, most are likely to choose the latter without batting an eyelid. And rightly so, as owning a home ensures security and at the same time you have an appreciating asset in hand. While owning a home is a financial goal most people set in their 30s, if you have hit 40 and you are yet to own a home, now is a good time to ensure this financial milestone is met. Buying a home using a home loan ensures that you have a longer time frame to pay the dues and it also ensures tax benefits as well.
2. Build An Emergency Fund
Life’s emergencies spring upon us at any point of time. Inevitable emergencies like a car breaking down or an unwanted hospital stay don’t announce when they land. So build an emergency fund with enough cash that will cover around three to six months worth of living expenses. Ensuring you have a solid emergency fund will ensure your finances are protected and it will also save you great stress.
3. Get Yourself Life And Health Insurance
Life and health insurance provides the much-needed security needed for you and your family. Getting an insurance cover before 40 will ensure they can be purchased at a lower cost. With every passing year, the insurance premium amount is likely to shoot up. At a time when hospitalization charges and treatments have skyrocketed, having a health insurance is ideal. Also term insurance keeps the family financially secure when there is an untimely end. So, it’s always beneficial to purchase both life and health insurance for the entire family.
4. Retirement Planning
Most people retire by the age of 60. So while in your 20s and 30s you may not prioritize retirement savings, as soon as you hit 40 don’t get discouraged but start right away! You still have 20 more years to save up. The challenging thing though is to predict how much is enough for retirement. Investment giant Fidelity, however, suggests saving three times your current salary by the time you reach 40 as a pretty good target to aim for retirement savings.
5. Plan For Your Children’s Education
As you enter your 40s your children will be nearer to starting college. College tuition is increasing every year. Along with that when we add boarding, books and other living expenses, sending children to college is a costly affair. So its wise to start building a fund towards the children’s education fund. A financial instrument to consider for investing for your children’s educational needs is mutual fund SIPs.
Idea & Concept: Suvin David, Research Analyst / Faculty
Content Development: Anju Kurian