Did you do a double take on that title? Yes friends, I’m 40 (soon to be 41) and I found it interesting that there aren’t many financial articles directed at mid-lifers. It makes you feel a bit forgotten. Or could it be that everyone assumes we’re stellar at managing our finances.
But what if you aren’t stellar at managing your finances? What if you’ve had a few financial missteps along the way and need to get back on track?
Just because you’re at mid-life doesn’t necessarily mean that everything is running tickity boo. It’s possible that you’ve been through a divorce (my hand’s up), maybe you’ve changed careers and taken a pay cut, or worse yet, maybe you’ve faced job loss (my hand’s up for that one too). And I’m doing this all solo too.
So what do you do? How do you bounce back financially from these setbacks? How do you create a budget that makes sense for midlife? Well ladies, gather round, here’s what I’m doing.
Do a values and goals check in.
It’s possible that it’s been a while since your last financial review. Or if you’ve experienced a lot of life changes since your last check in, it’s possible that you’ve experienced a dramatic shift in mindset. When I went through my divorce, I did a check in. When I lost my job, I did a check in. Each time something major happened along the way, I made sure to take time to do a check in. Doing this made me realize I had anxiety over getting another sales job, but was super uber happy about the thought of a freelance writing career. Trust me, take the time.
A few questions to ask yourself:
Are your goals in line with your current financial situation? Are they realistic? Trying to save $1000 a month on a $2000 salary is tough stuff and likely won’t happen.
Does this light me up or give me a feeling of anxiety?
Are you happy? (Yep, simple as that.)
Do your values match your financial goals?
Am I fearful? Sometimes fear can be our biggest guide. If I’m afraid of something, I know I have to conquer it.
Get your head in the game and don’t panic.
The biggest part of the battle with your finances is your head game. If you’re not focused on your goals or unaware of your bad spending habits, you could be headed for a retirement at age 90. I’m not sure about you, but I don’t plan on working until I’m 90.
Another challenge we face is the “OMG, is that all I have saved?” freak out. Trust me, I know all about it. After 16 years in corporate sales, I looked at my retirement accounts and said, “That’s it!? That’s all I have after all those years of contributing?” The next thing I did was to head over to a retirement calculator to figure out how much monthly income I needed in retirement, saw the number, and proceeded to panic.
The problem with panicking is that you have a deer in headlights moment. You immediately lose focus and stop doing the things you should be doing to keep your retirement and budget on track.
Focus on solving the problem instead of panicking. Let go of your guilt and anxieties over your past financial mistakes and start fresh.
Create a new budget. That’s what I did for 2017. It’s never too late to start and you’re never too old for cash envelopes. I thought doing a cash envelope system was silly and for families, but I couldn’t have been more wrong. So far it’s keeping my spending in line and within budget.
Resilience is your best friend. If you’ve lost your job, don’t get too down about it, you will bounce back. The idea is to be strategic with not only your finances but in how you face the pending job search. Don’t blindly start applying to every job out there. Instead, see #1 and take your time. It’ll be all right.
When I lost my job, yes, I wallowed a bit. You will, it’s inevitable. I had thoughts like: “how does this 40-something find a job in a sea of millennials”, “can I start over?”, “how do I start over”. It was then I got my head in the game, decided it was the perfect time to decompress after years of stress in corporate and change my career path. I decided to upgrade my skills and embrace the new world of freelance work. I’m still here, still able to pay my bills and am much happier.
Related: Coping with Job Loss and Debt
Pay Down Debt.
If you’re lucky, you shouldn’t have any debt aside from your mortgage. If you do have debt, now is the time to get aggressive and get rid of it. The last thing you want is to have a large amount of debt or mortgage payments when you’re in your sixties. Your budget should focus on paying down your debt as quickly as possible to minimize interest expenses and get you saving. Take a close look at lifestyle inflation. As your salary increased, it’s likely your lifestyle increased. Consider looking at less expensive options, or, if you’ve opted for a simpler lifestyle, think about cutting out some expenses altogether. If you’re divorced, are you still trying to live the same lifestyle as when you were married? If so, it’s time to look at your current income and create a budget that has you spending less. When you reach 40, debt needs to be a thing of the past.
Ditch credit cards and create a cash only budget.
Oh ya, I’m going there. If you have a hard time controlling your spending with credit cards, you might want to consider ditching them altogether. Forget the rewards points, the travel perks, and the cash back; it’s not worth it if you’re in debt. Think of it this way, if you’re in debt and keep charging to your cards, you’ve probably paid for those rewards fives times over by now. Go on girl, nix the cards, go cash only and get your financial house in order. It will be difficult. Freeze them, lock them away, but keep them out of sight.
Plan a retirement savings catch up.
By age 40, I’m hoping that you’ve figured out the importance of saving for the future. Of course, knowing and doing are two separate animals. We all know what to do; it’s in the execution where we often fail. I’m a prime example of this. I knew from a very early age that saving for retirement was important, yet I didn’t take advantage of putting as much as I could into retirement savings.
If you’re behind on your retirement savings, you need to start catching up as best you can during mid-life. It might be scary to look at, but try out a retirement savings calculator to get an idea of what you should be saving each month. It’ll also show you that if you keep contributing at your current rate, what your income would be in retirement. That’s the scary part. Mine was $15K a month. Yikes!If you Google, “Retirement Savings Calculator”, you’ll have an endless list of choices. But be careful! Use the calculator to your advantage, don’t be sucked into signing up for an investment product you don’t want.
Don’t panic if the number is not where you want it to be. Instead, use it as motivation to create the retirement life you desire.
Simplifying your life can be one of the biggest boosts for not only your well-being but also your bank account. It’s likely that over the years you’ve accumulated a lot of stuff that probably doesn’t bring you joy anymore or that you’ve completely forgotten about. Simplifying life not only applies to decluttering stuff but also decluttering your financial world.
Classy ladies don’t do debt, so go on, write down what you earn, create a new budget aimed directly at mid-life, and crush it. Because you can.