Financial Frights: 12 Terrifying Tales of Money Mismanagement in Your 40s

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In your 40s, you may feel like you have it all together financially, until you don’t. 

From unexpected expenses to poor financial decisions, there are common mistakes that can lead to financial woes at this age. 

This article will take a look at twelve terrifying tales of money mismanagement in your 40s that are more common than you may think. 

Keep reading to avoid these financial frights and keep your finances in check.

#1. Not Having Someone Review Your Finances

When you are young, your finances are relatively simple.

You need an emergency fund, additional savings, and a retirement account.

But as you age and have a family, things change.

In addition to the above, you need to think about college, life insurance, long-term care insurance, if you want to leave money to your kids, and more.

This can quickly become very complex, and many throw up their hands and give up.

A better option is to talk to a financial professional.

You don’t need to have them manage your money for you. Simply pay them a couple of hundred dollars to review your finances and build a plan for you.

With this plan, you can now take meaningful action to reach your goals.

#2. Don’t Get Annual Doctor Checkups

As you age, more health issues can start to creep up.

While we all think we are invincible, we are not.

And the sooner you spot any issues, the easier they are to manage.

For example, if you catch skin cancer early enough, you can have the spot removed.

But wait too long, and now you will need more advanced and costly treatments.

As annoying as it might be to visit your doctor every year, you will be grateful you did if anything comes up.

Plus, the healthier you are, the less likely you will be saddled with high healthcare costs in retirement.

#3. Not Saving More For Retirement

As your salary increases, you should be putting more away for retirement.

But sadly, many people don’t do this.

They keep the amount they are saving the same. Some may even cut back.

It is understandable to see why, as having a family, a mortgage, and hobbies can add up.

But you must increase the amount you save as you earn more.

This ensures a retirement that will avoid financial struggle.

#4. Not Paying Extra on Their Mortgage

Your mortgage is your largest monthly bill, and while it can be painful to write the check, it is critical you try to pay more every month.

Doing so will help ensure you don’t have a mortgage when you retire.

The benefit here is that you will need less money to survive.

For example, if you have a $1,000 mortgage payment, that is $12,000 more per year you need in retirement.

But if you don’t have this expense, you can use the money you have saved for other things.

You don’t need to pay off your mortgage in 10 years but try to pay something extra each month, even if it is rounding from $1,152 to an even $1,200.

Not only will you pay off your loan sooner, but you will save thousands in interest as well.

#5. Ignore Interest on Savings

Having money in an emergency fund is one of the basic principles of personal finance.

But too many people put their savings in the bank they have their checking account with.

This is a problem because the interest rate is most likely close to zero, even with many banks raising interest rates.

Why does this matter?

If you have $20,000 in an emergency fund and it is earning 0.50% in five years, you earned a little more than $500.

But put that money in an account earning 3.5%, and in five years, you earned close to $4,000.

And don’t make the mistake of thinking this doesn’t apply to you if you have an online savings account.

I have my savings with Capital One 360. But my accounts were more than five years old. In that time, they introduced newer savings accounts.

I found out my savings paid 0.30% while the “new” accounts paid 3.6%. I was missing out on hundreds of dollars.

Take five minutes to check your interest rate and switch to a better bank if yours isn’t paying a competitive rate.

#6. Don’t Take Advantage of AARP

Many people don’t realize you don’t need to be a senior citizen to sign up for AARP.

You can do it at any age.

And the sooner you sign up, the sooner you can take advantage of member discounts.

You can get discounts for travel, dining out, healthcare, gifts, groceries, entertainment, and more.

For many people, the savings far outweigh the annual membership cost.

#7. Delay Major Repairs

As important as it is to catch things early when it comes to your health, it is also important to catch things early regarding your belongings.

If you have a water heater that is over ten years old, you might want to spend the money to have it replaced now.

It isn’t fun to spend $1,000, but that is much less than if it fails and you have a flooded basement.

Not only will you have to spend more money, but you will have the headache of dealing with the insurance company and contractors to fix everything.

#8. Don’t Shop For Insurance Coverage

If you have the same insurance coverage you signed up for over ten years ago, you might be wasting a boatload of money.

Over the years, your rates increased, and while you might get discounts, you aren’t getting any discounts for being a loyal customer.

Most insurance companies offer rock-bottom premiums to new customers to get them on board.

Then the rock bottom pricing ends.

You need to shop around to see if what you pay is competitive with the market.

The good news is that this is easy to do, thanks to technology.

Now you can get multiple insurance quotes for free in minutes.

Who knows, you might be able to save $1,000 or more by switching.

#9. Not Having Estate Documents in Place

Most of us don’t want to think about passing away, but it is a reality of life.

And while putting together estate documents isn’t exciting, they are a must.

Think about your partner or kids when you pass if you don’t have these documents.

Not only will they be grieving, but they also have the stress of figuring out where all your money is, how much you had, what you want to do with your belongings, and more.

With proper estate documents, that stress is mostly gone.

They have a guide for what to do, and any only need to follow a few steps.

So while you might not be excited to get things in order, do it for the people dealing with your estate and make things easier on them.

#10. Not Funding a Roth IRA

A Roth IRA is a great retirement account that everyone should have.

You don’t get any tax breaks for putting money into the account, but you don’t pay any tax on the money you take out, including earnings.

This is a great way to build up your retirement savings and keep your taxes low in retirement.

While there are limits to how much you can contribute annually, putting something in this account type is better than nothing.

#11. Not Thinking About They Want in Retirement

Too many people think of retirement as a time to stop working.

Then when they do retire, they are miserable because they don’t know what to do every day.

Take some time now and think about what retirement looks like to you.

Are you traveling? Volunteering? Enjoying hobbies?

The more detailed plan you create, the more you will be prepared when the time comes.

Plus, this level of detail can inspire you to save more.

What is more appealing, saving for retirement or so you can play golf at all the courses on your bucket list?

#12. Putting Their Kids First

It’s natural to want the best for your kids.

But too many people put their kids ahead of themselves, especially regarding money.

They prioritize saving for college instead of their own retirement.

We all know that college costs an arm and a leg, but there are options if you don’t have enough money.

You could go to school part-time or community college for a few years.

You might even get a job and see if your employer will help pay.

Then there are student loans, which can be good if used within reason.

But there are no loans for retirement. And no one wants to retire only to work to afford to live.

Finally, think about the stress you will put on your adult children when you get older and don’t have any money.

Now they have to take on those costs and their living costs.

Don’t put this stress on them. Make your retirement a priority.

And here is a bonus point. If you put yourself first and have plenty of money, you can gift your kids some money to help pay down their student loans.

Find Out if You’re Financially Stable

Do you want to get to a place where money isn’t stressful? This is known as financial stability.

Here is how to know if you are financially stable

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But with so much financial advice out there, building wealth seems impossible. Not any more. Here are the simple steps you need to take.

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Learn How To Save $100K

Saving money can be hard, especially if you are looking to have $100K in the bank.

But while it feels difficult, don’t let this stop you. Here is how you can save $100,000 in nine steps.

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How To Start Over Financially At 50

It can be difficult to start over financially at any age. But when you are 50, there is added pressure.

Not only do you have a limited number of working years left, but you also see how well others in your peer group are doing.

If you are starting over at 50, don’t give up hope. Here is how to drastically improve your finances.

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How To Save Money When You’re Broke

When you have no money, the idea of saving sounds impossible. In fact, for many people, the idea never crosses their mind because they are only focused on getting money to survive.

But there are steps you can take to actually save money even when you are broke. Doing so will help you change your financial life faster than you thought possible.

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