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6 tips for financial planning in your 40s

Financial planning at 40-something
Financial planning at 40-something © auremar/Shutterstock.com

If you're in your 40s, you could be considered either a "late baby boomer" or member of "Generation X." Either way, you're at a time in your life when you're putting youth aside and should be doing some financial planning for your future and your family's future.

A dilemma faced by people in their 40s is that they typically need to be saving for college tuition for their kids and putting money into a retirement account while simultaneously buying a house or saving for a down payment. Financial experts can help you sort out where your savings should be going in your 40s.

"Not having a financial plan is actually just having a really bad plan," says Alexa von Tobel, founder and CEO of LearnVest.com in New York. "Every financial plan is specific to the individual, but you should look at your income and set priorities for paying off debt and saving for different needs."

These financial planning tips are meant to help 40-somethings find balance in their hectic lives of spending and debt.

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If you're in your 40s, you're likely juggling several financial goals.

Many people in their 40s need money to buy a house, pay off debt and save for college tuition and retirement.

Experts say the first thing to do is establish an emergency fund in a savings account. Three to six months' worth of expenses is about right. Next, if you have credit card debt or any other bills, make it a priority to pay it down so that you can channel your current income into investing for the future. In a workplace retirement plan, save at least as much as your employer matches -- but more if you possibly can. And if you can manage to save more, open an IRA.

If you have children, start saving for their college educations as soon as possible after they are born, even if you can only save a small amount. Hopefully, you'll be able to increase the amount you save as your income rises. And don't forget to do an insurance-needs analysis.

 

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