Have you ever celebrated a birthday and thought, “How am I this old?” That happened to me this week as I hit the big 4-0. So far it feels like just 39. No new back pain or anything like that to report. But it has made me think more about the future. How is your future shaping up? Are you planning for it now? If not, here are three money moves you should make before your 40th birthday…
Get rid of your debt: Interest rates on credit cards are absolutely bonkers. I only have one credit card and I can happily say that’s it’s been pretty bored the last few years. I’m not sure of the last time I took that little guy out of my wallet, but he’s got a zero balance and he’s been that way for a while. While credit cards do serve a purpose and can be a valuable financial tool, hopefully by the time you turn 40 you’ve got your credit card spending under control and are working to lower any debt you’re still dealing with.
Automate everything: When you’re young (especially before you become a homeowner), even if you’re not making much money, you feel loaded. You only have a handful of bills, you’re probably still driving the car you had in college, and if you have roommates, your rent probably isn’t too costly. You’re buying anything and everything you want and it isn’t really hurting your bottom line. But once you have to buy a new car or you reach the decision to get your own place, personal finances start getting real. You start thinking about saving more than spending. This is the perfect time to make your life easier by automating EVERYTHING. You can automate bill pay. Your 401(k) is automatically taken out of your check. You can set up your direct deposit to send a percentage of your check into savings before it dumps the rest into your checking account. It really makes being a grown-up way easier.
Be ready for emergencies: Hopefully your IRA or other retirement account isn’t all the money you have saved. But if your savings are lacking, there’s no time like the present to beef up that account. Even if things are going smoothly right now, next week your fridge, washing machine, and water heater might all die at the same time. Knock on wood. But seriously, those things could happen and that’s just life. I’ve only been a homeowner for three years, but the first thing I’ve learned about it is that you’re constantly having to spend money on your house. That’s just the way it is. Be prepared.