Compare rates on savings accounts and money market accounts to find the right place to stash your emergency fund.
Working forever isn’t a retirement plan
When you hit your 40s, you should understand that saving for retirement is a critical part of your financial strategy. If you’re behind on retirement savings at this point, consider increasing how much money you’re contributing to your retirement accounts.
The maximum contribution amount for 401(k)s is $18,000 in 2017 and $18,500 in 2018. Outside of your workplace plan, you can contribute an additional $5,500 to an IRA.
Credit is a tool
At this stage, you’re likely dealing with a mortgage, car loans and children entering college. “A healthy credit score is vitally important to you,” said Bruce McClary, vice president of communications at the National Foundation for Credit Counseling.
If you examine your credit score and don’t like what you see, chances are you haven’t paid your bills on time. “Paying on time counts for about one-third of your score,” McClary said.
Committing to paying everything on time is the obvious solution to this problem.
It also pays to check your credit report carefully for credit killers, such as identity theft or inaccurate reports.
Finally, at your age, work to pay off debt and keep balances low, he said. “Focus on power-paying those balances and getting rid of them as fast as possible.”
That will give you more credit flexibility if you really need to borrow because you have a health emergency, want to start a business or need to replace the roof. “A solid-gold credit score will make borrowing for any of these easier,” McClary said.
From your health to your home, it’s important to have insurance to cover devastating financial losses.
“Many people tend to purchase coverage with low deductibles, which can be costly,” said Robert Hoyt, who heads the risk management and insurance program at the University of Georgia. “Because states have low liability limits, people think they should start there. But for most individuals, those limits are woefully inadequate, so they end up paying a lot for insurance that doesn’t cover enough.”