3 Money Hacks Every 40-Year-Old Should Know

3 Money Hacks Every 40-Year-Old Should Know


Is there a more financially challenging time of life than your 40s? In your 20s, you’re just starting out and you never have any money. But that’s okay because none of your friends have any money either. In your 30s, your biggest challenge is avoiding the living-large-on-huge-debt trap most of your friends will fall into.

By the time you’re in your 40s, you’re facing some big-ticket responsibilities like paying off your mortgage and funding the kids’ college. But your top priority is saving for retirement and figuring out how to build a secure nest egg.

We asked some of Dave’s financial professionals for advice you can use to make working toward your retirement goals a little easier. Here are three of their suggestions you can use to get started today!

Hack #1: Make minor adjustments to your budget, one at a time. Soon, you’ll be saving more without sacrificing your lifestyle.

If you’re ever going to win the battle with those everyday expenses that seem to eat up more and more of your paycheck each month, you’ve got to have an effective budget. Chadd Hoeft, an investing Endorsed Local Provider (ELP) in Omaha, NE, understands why people have hang-ups about budgeting. “They’re worried that they’re going to need to change their lifestyle so much that it affects how they live today,” he said.

He recommends you start by examining your spending in just one category, like entertainment or eating out. “Then let’s say you don’t go out to eat one or two times as often as you did the month before,” Chadd suggests. “Start with that position, and use those dollars to contribute toward your future.”

Using this step-by-step approach, you’ll be able to see how those small adjustments work in your favor without making a 180-degree change in your lifestyle, he said.

“When people start keeping track of those things, they feel like they got a raise,” Justin Widick, an ELP from Omaha, explained. “They can start setting aside a significant amount—more than they thought they could before.”

Hack #2: Don’t turn down free money—especially when it comes to retirement. Take full advantage of your employer’s contribution to your nest egg.

You won’t have to look far to find a place to put that extra money to work. Nearly 80% of full-time workers have access to a 401(k) or other workplace plan, and 80% of workers participate in those plans, making 401(k)s the most popular way to save for retirement.

Many 401(k) employer matches are also more generous today than they were in the past. According to a recent employer survey, the most common employer match is now dollar-for-dollar on the first 6% workers save in their 401(k) plans.

But a lot of workers are missing the boat on that free money. “Sometimes people have a 6 or 7% match and don’t realize it,” Justin said. “They’re only putting in 1 or 2% or may not be participating at all.”

Your employer match is not only free money; it’s a 100% guaranteed return on your retirement investment. For the average income, it equals $2,650 a year and could add half a million dollars to your retirement fund!

Who walks away from 500,000 smackers? Not you! Your first step toward a secure retirement is to make sure you’re contributing enough to receive the full employer match in your 401(k). With your 401(k) moving full steam ahead, you can begin investing in a Roth IRA. Aim to invest a total of 15% of your income, starting with your 401(k), with the rest going into your Roth IRA.

Hack #3: Educate yourself about investing and work with an experienced advisor. You’ll make better decisions so your savings can grow faster.

After dedicating such a huge chunk of your income to retirement, you’ll obviously want to see your retirement fund grow by leaps and bounds. Unfortunately, years of investor behavior studies show that over the long-term, investors’ own poor habits cause them to miss out on as much as 7.5% of their potential investing return. Their emotional decision-making costs them hundreds of thousands of dollars by the time they retire.

“Make sure you’re educated [about investing,]” Chadd said. The more you learn about how mutual funds and stock market cycles work together to make you money, the easier it is for you to make decisions based on facts instead of fear. That’s the key to maintaining your long-term retirement strategy and avoiding the bad habits that sabotage other investors’ plans.

Instead of learning those lessons yourself through trial and error, get on the fast track to an investing education by working with an investing advisor with the heart of a teacher. Your advisor can show you how to choose great mutual funds for your retirement plan and show you how a consistent strategy builds your nest egg—even when the stock market drops.