Financial planning: here are two words that many UK citizens refuse to reconcile with their expenses and monthly income. As a result, there is little money left to settle the accounts and also to think about a more peaceful and financially stable future.
Know, however, that it is never too late to start. Nowadays, many begin to save at 40, showing that age is relative if you have well-defined goals for your life!
Do you want to see it? In the topics below we will discuss some issues that have everything to do with the strategy of saving at 40 and build a solid patrimony to retire with a lifestyle much more immune to unforeseen events and crises! See what we will cover in this article:
- Is it too late to start saving at 40?
- How do you know how much to save?
- Where to start saving at 40?
Is it too late to start saving at 40?
No! The answer, pure and simple, is this. It's never late, in fact, to take that first step towards the domestic economy and the construction of a solid financial patrimony.
Especially, due to an indirectly related factor: the life expectancy of UK citizens has been gradually increasing. Today, she is 72.8 years old for men and 79.9 years old for women.
On average, therefore, reaching the age of 40 implies being in the middle – or a little more than that – of your life. Plenty to do, experiment and discover in the decades to come that still await you in the future. Which only reinforces the importance of starting to save. Whether you are 20, 30 or 40, it's up to you. There is only one certainty, any time is a good time to save.
How do you know how much to save?
This issue is more complex, but it has everything to do with your habits and lifestyle. If you want a high average income – say, R $ 5,000 per month – it is essential to know when you will retire (and how much you will receive, on average) and how much can you save monthly, from the age of 40, to have the desired value for the future.
Or, you may simply want to save at 40 to make an old dream come true, like a long trip around the world, purchasing a property or just leaving your family with a robust financial reserve.
The first step, therefore, is to know the reason for your home savings and calculate how much you intend to target, periodically, to your favorite investment application.
Speaking of which, knowing which investments have everything to do with your desires is something elementary for continuously valuing your resources. For this, take the time to check out our article on the various types of market investments, as soon as you finish this reading!
Where to start saving at 40?
There is no denying it: financial control is the north that you must follow at all times to start saving at 40. So, know exactly what is your monthly income and also, all expenses involved over the same period.
To help, a expense spreadsheet it can make all the difference for you to anticipate eventual waste and superfluous expenses – in addition to helping you keep full control of your expenses and acquire more discipline.
But it doesn't stop there: through this diagnosis of your financial situation, you should consider any type of pending issue. For example: delinquent accounts, financing, loans … This all goes into the account because they are numbers that interfere with both your budget and planning to save month after month.
This does not, of course, prevent you from starting saving at 40 even with active debts. The difference is that the urgent recommendation consists of settle these pending issues. If you can afford these expenses and still save: even better!
Let's see what other aspects are relevant, in this sense, since we already understand the basic principle to start saving strategically!
Understand the reason to save at 40
Remember that an objective better defines your priorities and also the deadlines for achieving your goals.
For example: if your intention is to buy a good – such as real estate or a car – you can calculate the associated costs in advance and know precisely how much you should save (and for how long) in order to reach the goal without major unexpectedities. .
For a more relaxed retirement, you should consider your standard of living and the standard you wish to have when you retire. For example: if you are 40 years old and plan to end your career at age 65, you have to weigh the average income you intend to have and identify the monthly amount you will be able to save, periodically, to reach retirement age with the coveted amount. already duly yielding in its investment application.
Regardless of the reason, set one or more goals. This facilitates the search for goals and generates multiple incentives for you to stay on the line and with great financial discipline.
Create an emergency reserve
Before considering just the values for the future, think that it is important to guard against unforeseen events. For example: the crisis caused by COVID-19 has had a strong economic impact on people's income. With the emergency reservation, you avoid major problems.
Therefore, always direct some of your resources towards the construction of this financial reserve. However small, the accumulation of income can establish a solidity and security for you and your family, in case unforeseen and emergency expenses are necessary.
Find the best investment alternative for you
Aware of the goals and the amount that will be allocated to the act of saving, monthly, it is time to understand what to do with the money.
For this, delve into the subject of financial market investments. There are many modalities, with unique characteristics and more appropriate for the most diverse purposes.
We recently made a very complete post on the subject – especially for those who do not want to take huge risks of losing their assets. After reading this article, remember to check out our considerations on the better low-risk investments!
Be very careful with comparisons
It is common for you to try to save at age 40 – perhaps, you even tried before that – but with little success. And this tends to be a psychological factor rather than a cause, especially when we compare our situation with that of other acquaintances.
That way, if your brothers, friends and colleagues are able to save more than you, it is worth understanding the reason for the success, but also try to adapt the situation to your reality. They may have less expenses, more discipline, a higher salary … There are many factors that contribute to the distinctions, so avoid comparing yourself with others.
In turn, if you can only save $ 50 a month, or even less, stick to your goal. Through it, you will gradually achieve your desires, just insist.
Learn to save
Many people say they know how to save, but is it true? Throughout the article, we have sometimes reinforced the importance of analyze day-to-day expenses in order to reduce them.
Then try it out. Review the accounts, find out what can be saved and start adjusting your budget to settle all expenses, generate an emergency reserve and also for your savings with more ambitious goals.
Remember that the reduced amount, however small, is something. Over time, the habit of saving becomes more natural, and you will learn to reduce expenses more and more and turn that value into investments for your future.
Assess your sources of income
Good tip for saving at 40: can you generate more income? Who knows, an autonomous activity? This type of issue seems to generate physical and psychological stress (especially, to reconcile with your primary professional activity), but it can be an interesting alternative for a specific period.
Let's say, for example, that you have some pending accounts and they are having a profound impact on budget planning. So, when starting sporadic and flexible work to generate extra income, this obstacle can be quickly resolved.
Only then can you proceed with the initial planning and ensure an unimpeded budget for old bills to pay.
Keep your budget up to date and flexible
Finally, remember to have more flexibility in your budget. If you have to save more, in a few months, know in advance how to deal with it. If you need extra income, quickly turn to your plans to increase the final value of your final budget.
Remember of design different scenarios so that you and your whole family know how to adapt to what can happen in the short, medium and long term. With that, you will understand that saving at 40 is not a problem – especially, in view of unshakable planning that manages to shield your budget in the face of any type of problem.
And so, we want to hear from you now: what did you think of our tips for saving at 40? And what are your experiences and the great challenges faced in this endeavor? Share them with us in the comments field below and help us expand the discussion on the subject with other readers!