By the time you reach age 30, you’ve probably dealt with some financial ups and downs. Hopefully you’ve mastered the basics of budgeting and saving. In midlife your earnings may increase, giving you additional income to enjoy. Your responsibilities are also likely to be greater now, especially if you start a family. Here are some financial goals to consider in your 30s and 40s.
Here’s what we’re going to cover:
- Buy a home
- Save for your children’s needs
- Take out life insurance
- Invest in the future
- Reward yourself
- Oportun: Affordable lending options designed with you in mind
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- Your 30s and 40s are usually a time when you begin to earn more money and also have greater responsibilities.
- In midlife, you may want to buy a home, take out life insurance, save for your children’s needs, and invest wisely for your own retirement. Review your financial goals to see if you’re on track to meet them.
- Midlife rewards could include taking classes, spending quality time with family and friends, and traveling to new places.
Buy a home
A home is the biggest purchase most people ever make. In preparation, you can build up a strong credit score, grow your savings, and monitor the real estate market.
You’ll need enough cash for the downpayment and closing costs. Lenders can help you understand what financing is available to you. They’ll provide a pre-approval letter, which is like the lender committing to finance your loan if everything passes the verification process. You can get pre-approved from multiple lenders, helping you find the best rate and mortgage terms.
When choosing a loan, you’ll have to choose between a fixed or variable interest rate. With a fixed rate, your payment sizes won’t go up or down over the life of the loan. With a variable, your payment size will change as the market rates change. Before accepting a variable rate, be sure to understand how much more expensive the loan payment could become.
You should also understand escrow and taxes, which can be paid as part of your monthly bill to the lender. Other expenses of homeownership are HOAs fees, maintenance, repairs, and renovations.
Home ownership is an investment into your future. You’ll earn stability, and if you eventually sell, you’ll have access to the cash you put in. This is a big decision!
Save for your children’s needs
Having children can be costly and it’s important to financially plan for them. Budgeting—knowing how much money comes into your household and what it’s spent on—continues to be key to financial stability. Predicting future expenses can help you plan—from childcare to cellphone plans. Learning how to communicate with your partner about finances, your goals, and what is important to each of you can help alleviate one of the most stressful elements of having children.
The sooner you start saving for your kids’ futures, the more you’ll have saved. A 529 savings plan offers tax advantages when you set aside money for their college education. Some states, like California, automatically set up college savings accounts with a deposit when babies are born (babies born in CA can check CalKids eligibility here). You might also want to begin saving to help your child pay for a wedding. Both these steps can ease your children’s finances as they start out in adult life.
Take out life insurance
Life insurance is one way to provide for your family if you pass away unexpectedly. You pay a regular premium, and the beneficiary—usually your partner or children—receives a fixed amount when the insured person dies. This money can be used to temporarily replace your income and help your family cover living expenses after your death.
Invest in the future
It’s never too early to start saving for retirement. If your employer matches contributions to a 401(k) plan, you can easily double what you put aside. High-yield savings accounts and CDs are also stable ways to invest in your future without putting your capital at risk.
If you feel comfortable with more aggressive investing, you may want to open a brokerage account and buy stocks. Just be aware that you can lose money in the stock market as well as gain it. A good financial advisor can guide you to investment decisions that fit your needs and goals.
Reward yourself
No matter what your age, it’s important to enjoy life. That could mean taking classes to learn something new, spending quality time with friends and family, or traveling to a place you’ve always wanted to see. Don’t be afraid to treat yourself well while keeping an eye on your long-term plans.
Oportun: Affordable lending options designed with you in mind
Now that you’ve reached midlife, you’ve probably gained confidence in handling your finances. You’re ready to make big decisions about home ownership, your family, savings, and retirement. Creating financial stability is a lifelong process, but you’re well on the way.
Oportun is here to help at each stage of your financial journey. Visit our homepage to learn about:
Sources:
Bankrate. How to shop for a mortgage without hurting your credit score
Investopedia. 529 plan: What it is, how it works, pros and cons
Experian. What are the different types of life insurance?
Charles Schwab. What is a 401(k) and how does it work?
CNBC. How to manage your money in your 40s, according to CFPs
CalMatters.org. Raising kids in California? They may have college savings accounts you don’t know about.
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