The following is a guest post. Enjoy!
Your 40s can be considered one of the most financially difficult 10 years of your life. At this point, people are typically balancing multiple lifestyle costs such as their childrenโs education; ageing parents and trying to save for a comfortable retirement can cause significant stress levels.
However, if you were able to establish good financial habits during your 30s, they can be carried into your 40s and make things easier. Here is some advice for people currently in their 30s โ ensure you learn and capitalize now so that you can enjoy your 40s.
Take some risks
You are likely to have at least 30 years of financial accumulation ahead, and therefore your 30s can be considered the best time to take on a realistic level of 'good debt'. Aim to invest in assets that can grow in value, such as property. It's unlikely that you'll have to worry too much about market cycles because most should wash out over 30 years (the maximum amount of time available in which to pay off a property.)
Determine your behavioral biases
Before you start investing, take some time to figure out your behavioral weaknesses; effective investment management can be seen as a crucial foundation for successful financial growth. For example, suppose the pit of your stomach turns when you see any decline in the amount of money on your statement. In that case, it may be best to steer clear of investing in an equity fund because even though there can be potential to receive high returns, it is susceptible to market fluctuations and therefore requires a long-term investment approach. Instead, it would be a good idea to start investing in a more conservative fund.
The bottom line is that you should work out what will inhibit you from making the right decisions, and then try to put instruments in place to protect your finances from any inherent biases.
Donโt succumb to the โI donโt need to worry about my finances nowโ mentality
Your 30s are likely to be busy; finding your ideal career, starting a family and contributing towards retirement are decisions that require careful thinking. However, you should make a concerted effort ensure financial admin doesnโt take a back seat because forgetting to sort out that tax-free investment for your child or upping your contribution to a retirement annuity can affect your future. Treat each important decision as if you were retiring in a few months, not decades.
Seek advice from a financial professional
You never have to feel that youโre alone. It's an excellent worthwhile asking for guidance from a financial professional such as an independent financial adviser (IFA). He/she can answer the critical questions that can help determine which investment should meet your financial circumstances.
By instituting these astute financial practices in your 30s, you should find it much easier to live a more balanced lifestyle. It can give you the freedom to spend more time with your friends and family while having peace of mind that your finances are under control. Itโs never too early to become financially savvy.
