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6 Money Moves to Make Before You Turn 40

The Motley Fool logo The Motley Fool 1/22/2022 Maurie Backman
Mature woman working from laptop with documents in hand. © Getty Images Mature woman working from laptop with documents in hand.

They may say that 40 is the new 30, but aiming to be in a solid place financially by your 40th birthday is still a good idea. Here are a few key moves to make in time for that milestone.

1. Have a fully loaded emergency fund

An emergency fund is something you need at any stage of life. But you should definitely do your best to have enough money in your savings account by 40 to pay for three to six months of essential bills. By the time you reach 40, you may have a lot of expenses, such as a mortgage and car payment. So you need protection in the event of losing your job. You also need cash reserves in case unplanned bills arise that your paycheck can't cover.

2. Get rid of credit card debt

The longer you carry credit card debt, the more it'll cost you in interest. But also, as you get older, you may want to focus on different goals, like building a nest egg and putting your kids through college. And if too much of your income is monopolized by debt, those goals may be difficult to reach. That's why it's a great idea to shed your credit card debt by age 40 if possible. And if you consolidate your debt via a balance transfer or personal loan, that debt might be easier and less expensive to pay off.

3. Start funding a retirement plan

You'll need independent savings to manage your bills comfortably once you retire, and the sooner you start socking money away in an IRA or 401(k) plan, the more opportunity you'll have to invest that money and grow it into a larger sum over time. By 40, it's wise to at least have the beginnings of a nest egg -- even if your savings still need some work.

4. Buy life insurance

If you have people in your life who depend on you financially, then it's important to put a life insurance policy in place. The younger people are when they apply, the more likely they are to qualify for an attractive rate on premiums. So it pays to do some research and start gathering quotes before you turn 40.

5. Create a will

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Although 40 is relatively young, you're actually never too young to put a will in place. Without one, you'll get no say over what happens to your assets once you pass away. If you have children, it's especially important to have a will that maps out a contingency plan for their care. The same applies if you have pets.

6. Get your credit score into good shape

You never know when you may need to take out a loan or refinance your mortgage. And the stronger your credit score, the easier it will be to borrow at an affordable rate. If your credit score could use some work, you can boost it by paying all of your bills on time, eliminating some of your credit card debt, and keeping long-standing credit accounts (like the credit card you've held for 15 years) open.

Whether you're excited or not about the idea of turning 40, the last thing you need at that point in life is financial stress. Check these items off your list before your 40th birthday, and you'll have even more reasons to celebrate.


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