Managing your money in your 30s & 40s

Personal Finance · 24 Sep 2019

Your 30s and 40s are the time in your life when you might well be approaching your peak earning years, but it’s also when life turns into a juggling act.

Your 30s and 40s are the time in your life when you might well be approaching your peak earning years, but it’s also when life turns into a juggling act. Having children and saving for their education, paying off a mortgage, saving for retirement, maybe even caring for elderly relatives - there can be a lot of demands on your income.

Here are some suggestions for managing your money as life takes off.

Pay off high-interest debt

If you’re struggling with high-interest debt, particularly from credit cards, you’re not alone. If you’re wanting to be smarter with your money, paying off your highest interest debt first is a good way to go.

One way to do this is a debt consolidation loan, which may allow you to combine multiple debts into one, simple payment, or just pay off one debt at a lower interest rate. The other good thing about transferring card debt to a debt consolidation loan is that it gives you a set period of time to clear the debt, rather than paying off minimum card payments each month without bringing the debt down.

Another alternative could be a transfer to a 0% interest card. Just be mindful you will still pay interest on any additional spending on the card, and the 0% is for a fixed period only.

Plan for the worst

Once your life starts to include things like kids and a house, it’s a good idea to plan for the worst. Think about putting together a will and do an audit of your insurance cover to make sure you have the protections that best suit your situation, whether that’s life, health, income, contents or even pet insurance. Seek independent advice on what cover is best for your circumstances if you’re not sure. Should the worst happen, it will be some relief to know there’s a plan in place and loved ones are taken care of.

Have the difficult conversation with your parents

If you’re not already caring for your parents, talk to them about what their wishes are should they no longer be able to manage in their own home, or make decisions for themselves. Try and talk specifics such as who will be in charge of medical decisions, where would they prefer to live, and who will make financial decisions. It can save a lot of stress if everybody knows the plan in advance.

Ramp up your retirement savings

Your 30s and 40s are the time to make sure you’ve at least started some retirement savings. You still have enough time before retirement to accumulate a useful amount, without having to set aside a large sum each pay day. If you have multiple different superannuation accounts as you've shifted jobs, think about consolidating them into one so you're not paying extra fees. This is easy to do online via the Australian Taxation Office. Both the ATO and MoneySmart have useful, informative websites on how to set up and manage your Super, including how to make the most of bonus government contributions, and how you can top up your Super account with salary sacrifices, or personal contributions.

Create good relationships with financial providers and cement your credit score

You never know what your financial future holds, so it’s a good idea to develop good relationships with banks and other financial providers, and keep track of what’s in your credit file.

This will stand you in good stead if you find you want to borrow for a larger home, or need to make use of other financial products such as a personal loan.

If you’d like to know more about improving your credit history and credit score check out our Credit Score Bootcamp.

Build up an emergency fund

If you can, it’s also a good idea to build up an emergency fund savings account. Even if you only put in a few dollars a week, it can be a useful buffer for when the car needs fixing or that dentist bill comes in.

Hot tip: If you find you’re saving money once you’ve consolidated or paid down some debt, think about shifting that money straight into a savings account. Every little bit helps!

Other articles you might like:

Why extending your mortgage can hurt

Debt consolidation - what is it, and is it right for you

Shop smarter at the supermarket

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