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Financial Advice for Those Turning Forty

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So you survived your surprise party and you are getting used to the fact that you have turned 40 years old quite well. You got all the typical gag gifts, but after you put the cane with the bike horn in the closet, allow yourself a moment to reflect. Although you may feel like you are still 28, you have reached a great milestone – and now is a good time to take a serious look at your finances.

Here are a handful of things to keep in mind now that you have hit the big 4-0.

• Look at the big picture. You likely have a lot going on financially, so take time to step back and consider what you are really trying to achieve overall. Make a list of all your financial obligations and goals – from daily expenses to long-term plans. Then start prioritizing them, being honest with yourself about the "need to haves" (retirement savings) and "nice to haves" (tuition paid in full for your college-bound child). Also, re-evaluate the products and policies you already have in place and ensure you make the most of your options. For example, this milestone is a critical time to maximize your qualified retirement savings. If your employer offers a 401(k) match, make sure you take advantage of it, and save the allowed amount in an IRA as well.

• Set limits. While it can be difficult to restrain your generosity, it is crucial to set boundaries with your children and other family members if they request financial help. Lending and borrowing within your family can lead to both financial and emotional stress, so make sure you are in a position to help – and set realistic expectations – before you provide assistance. If you anticipate needing to help finance your child's college education or a parent's stay in an assisted living facility, begin planning and saving well in advance to avoid compromising your own financial security.

• Educate your children. If you have children, take steps to instill financial responsibility now. Guiding them on a path to financial independence is positive for them, but also good for your own financial future. Research some of the ways you can talk to your children about finances, teach them to spend and save responsibly, and lead by being a positive influence. This moment may also be a good time to establish or update your will and guardianship plan, and ensure your family is adequately covered under your insurance policies in case you or your spouse are unable to provide for them because of a premature death or disability.

• Prepare for change. Unexpected events are bound to happen, but you can minimize the risk that an event like disability, illness, or death will jeopardize your financial security by having a contingency plan in place. It is difficult to consider these circumstances, but having an emergency fund or the proper insurance for unforeseen events may be a lifesaver someday. If your emergency fund goes unused, saving the extra cash will not have been in vain – consider using it to further another financial goal.

• Seek advice. It can be extremely challenging to prioritize your financial goals during your 40s, but your future financial security depends on it. Why go it alone? Consider consulting with a financial advisor and other professionals, such as an accountant and attorney. They can help guide you through the multiple demands you face and help you make rational – rather than emotional – decisions about your finances.

The most important thing to remember during this period is that though you may find it challenging to set aside the cash for your long-term goals, it is crucial not to lose sight of them. Remember that you are not as old as your age may sound! Ensure you save a manageable amount now while time is still on your side.


Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.

This communication is published in the United States for Texas only; and this advisor is licensed only in the states of CA, CO, FL, MO, NC, NM, OK, TX, and VA.

M. Ahmad Adnan, CFP®, CRPC®, RFC®

Financial Advisor

Business Financial Advisor

Ameriprise Financial Services, Inc.

3200 Steck Avenue | Suite 250 | Austin, TX 78757

Phone: 512.213.6400 Ext. 102 | Toll Free: 866.238.4230


© 2013 Ameriprise Financial, Inc. All rights reserved.

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