5 Money Moves You MUST Make Before 40 (Or Regret It Later!)

Is that “time-flies” panic starting to set in? Don’t worry, you are not the only one. Turning 40 is a huge milestone, and while it might seem ages away, the truth is, your 40s are closer than you think. Your future self will seriously thank you for making these crucial money moves right now. Procrastinating on these essential financial steps can lead to retirement shortfalls or getting trapped in debt.

Starting early gives you the advantage, and what is that advantage? Oh yeah… security and compound growth. So, let’s get started. Here’s your game plan to crush financial stress and build wealth, one step at a time—starting today.

1. Build a “Sleep-At-Night” Emergency Fund

Okay, let’s talk about real security. Forget the fancy investments for a second – I’m talking about a “Sleep-At-Night” Emergency Fund.  This is your safety net, your “life happens” cushion.  Aim to save enough to cover 6–12 months of essential living expenses.  Think rent/mortgage, utilities, food, the bare necessities. 

Don’t stash this cash under your mattress, though! Park it in a high-yield savings account – I’m using Ally Bank right now, but Marcus by Goldman Sachs is another solid option. These accounts offer better interest rates than traditional savings accounts, so your money can grow a little while it’s waiting for its heroic moment.

If you have trouble saving, you can read more about, “how to save money when you’re broke.“

Bullet-point Summary of Sources (if needed):

• Ally Bank: Online bank known for competitive interest rates on savings accounts and no monthly maintenance fees.
• Marcus by Goldman Sachs: Another online bank offering high-yield savings accounts with no minimum deposit to open.

2. Slay the Debt Dragon (Before It Burns You)

Time to face the music – and by music, I mean that nagging debt that’s probably stressing you out. We’re not talking about “good” debt like a reasonable mortgage here. We’re talking high-interest credit cards, personal loans… the stuff that’s basically financial quicksand. The faster you pay it off, the less money you waste on interest. A great method for attacking debt? It’s the “avalanche method”.

You prioritize paying off the debt with the highest interest rate first, while making minimum payments on everything else. It’s like aiming for the biggest, baddest dragon first. Trust me, the feeling of freedom once you conquer this beast is amazing. So, take a deep breath, grab your latest statements, and make a plan. You got this! Even a small extra payment each month makes a difference.

And one more thing, it is ok to ask for help, call your credit card company today and try to negotiate a lower APR. You’d be surprised how often they’ll work with you.

3. Max Out Retirement Accounts Like a Boss

Okay, let’s talk about your future self – the one who wants to relax on a beach, travel the world, or just, you know, not work until they’re 90. That future self needs you to start maxing out your retirement accounts now. A good rule of thumb is to aim to have saved at least 3x your current salary by the time you hit 40. Sounds daunting, right?

But it is doable. If your employer offers a 401(k), contribute enough to get the full company match – that’s free money! Then, aim to max out your contributions each year ($23,000 in 2024, if you’re under 50). If you don’t have a 401(k), or even if you do, look into a Roth IRA or a traditional IRA.

The key is to take advantage of those tax benefits and the magic of compound growth. I know, I know, it sounds boring, but think of it like this: every dollar you invest now has the potential to grow exponentially over time. This is time to channel your inner financial superhero. Start with a small, manageable increase. Try upping your 401(k) contribution by just 1% this month. Chances are, you won’t even miss it.

If you need help setting up or maintaining a 401k, there are financial literacy concepts to get you started.

4. Lock Down Insurance & Estate Plans

Okay, this part isn’t exactly glamorous, but it’s absolutely essential. We’re talking about protecting yourself and your loved ones, no matter what life throws your way.

First up: insurance. If you have dependents, or even if you just don’t want to burden your family with debt if something happens to you, you need term life insurance. And don’t forget about disability insurance – it can replace a portion of your income if you’re unable to work.

Think of insurance as the safety briefing you have before a filght, it is that important. Next, it is time to deal with the estate plan. I know it, no one wants to talk about estate planning. Making a will is a big part of that. It is a critical step. This is where, you decide who gets your stuff and making sure your wishes are honored. And, hey, it doesn’t have to be complicated.

You can even use online services like Trust & Will to create a basic estate plan in, like, 20 minutes. Seriously, it’s that easy. Update those beneficiary designations on your retirement accounts and insurance policies, too! This is all about having peace of mind, knowing you’ve taken care of the “what ifs.”

Okay, let’s tackle the final section.

5. Ditch Risky Moves, Embrace Smart Investing

Alright, you’ve built your safety net, slayed the debt dragon, and secured your future – now it’s time to get smart about investing. And by “smart,” I mean ditching the get-rich-quick schemes and embracing a long-term strategy. Think of it like this. When you were in your 20s, maybe you could afford to take some bigger risks with your investments. But as you approach 40, it’s time to play it a little safer.

You don’t want to jeopardize all that hard work you’ve put in. So, what’s the smart move? Low-cost index funds. These funds track a specific market index, like the S&P 500 (which is basically a snapshot of the 500 largest U.S. companies). Vanguard is famous for these, and for good reason – they’re a simple, diversified way to invest in the stock market without having to pick individual stocks. Another key to smart investing? Avoiding lifestyle creep.

As your income grows, resist the urge to drastically increase your spending. Keeping your housing costs below 28% of your gross income is a good guideline. And finally, automate your investments. Set up a regular, automatic transfer to your brokerage account – even $50 a week adds up over time! Fidelity is a great platform for this. This is how you build wealth, not just have money.

You can also create multiple streams of income to grow more income. To see how, check out this article on, creative ways to make money. This is how you build wealth, not just have money.

The Finish Line (to a Stress-Free 40!)

So, there you have it. Your five-step plan. Let’s do a quick recap: build that emergency fund, become debt-free, max out your retirement accounts, get your insurance locked down, and, embrace smart investing. That’s your path to making 40 an awesome, stress-free milestone. Don’t try to do everything at once, that’s a recipe for burnout, and we do not want that.

Pick one move to tackle this week. Even those small actions and steps will build momentum and lead to big wins down the road. Seriously, your 40-year-old self is already cheering you on. And, hey, because I am all about sharing, let’s get a conversation started: Which move are you prioritizing first? Let us know!