By the time you reach age 40, you should already be well on your way to building a strong retirement nest egg. But there are a few other milestones to shoot for well before retirement age:
1. Have a solid emergency fund
Emergencies can happen at any age, but most Americans aren't financially prepared for them. In fact, only 39% of Americans have enough in their savings accounts to cover a $1,000 emergency expense, according to Bankrate's latest financial security survey
Whether your car is making an ugly noise, your water heater suddenly stops working, or you find yourself in the hospital after an accident, these types of expenses are guaranteed to pop up at some point. And if you don't have the cash to pay for them, your only options include taking out a costly loan, putting it on a credit card and racking up debt, or pulling money from your retirement fund
Also, should you lose your job, an emergency fund can help cover expenses for a few months while you look for employment, saving you from having to sneak money from your nest egg. Ideally, you should have enough stashed away to cover three to six months' worth of living expenses in the event of a job loss or unexpected expense. That will protect your finances and keep you on track to reach your retirement goals
2. Pay down all high-interest debt
Not all debt is bad, but high-interest debt (like credit card debt) can be toxic. This type of debt can take years to pay off, and you could end up paying thousands of dollars in interest alone
The longer it takes to pay down debt, the more you'll be paying in interest. By paying down all your high-interest debt by the time you reach 40, you'll be able to make better use of that money by investing it in your retirement fund or stashing it away in an emergency savings account
3. Have 3 times your salary saved for retirement
By age 40, you should have an established retirement fund. While there's no concrete number as to exactly how much you should have saved by this age, it’s recommended having three times your annual salary saved by the time you turn 40.
2 2712 hours ago
It’s been reported that black families nationwide on avg have a net worth of $1,700 compared to white familes avg net worth of $116,000 (net worth is the amount by which assets exceed liabilities and debt).
Pretty alarming obviously. How is the problem solved? Here’s the cliff notes. 1st we have to understand what makes up net worth.
The 3 most common components of net worth are:
Owning where you live instead of renting automatically improves your net worth, having life insurance will improve the net worth of your family when your no longer here and help to create a legacy and saving for your retirement will provide a nest egg in your later years which will be a huge part of your net worth as it builds up.
Get life insurance
Contribute to your 401k.
The racial economic inequality, let’s try to solve it. The 1st step is education.
May and June in Review: The Good.
After asking, hinting and nagging, my husband came home one day and wanted to have his version of a budget meeting. Mostly he wanted to talk about buying himself a new car since the AC went out in his old car. Motivated by the AZ summer heat, I guess he was ready to finally talk money.
If you recall, he got a 3% raise in March so we (okay I) decided it was time to up his contributions. Doing this reduced his paychecks by about $200. I’m still working to adjust our monthly budget!
Why did we go the 401k route vs Roth IRA? After doing some research, we decided to follow the FI community on this one and take advantage of the pre-tax benefits.
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8 1220 hours ago
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Most Americans don't know the basics when it comes to money. The results of surveys and retirement IQ tests show a startling lack of financial literacy. In fact, less than 3% of Americans can pass this 6-question money quiz. Can you?