From college savings to career changes: The smartest things to do with your money in your 40s
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By the time you get to your 40s, you've checked off a lot of financial firsts.
When you were younger, you might have assumed you'd have everything figured out by now. But as soon as you master one aspect of your money, another challenge — or opportunity — seems to pop up.
Your 40s bring a new set of financial priorities, especially if you have children. Now is the time to start thinking seriously about funding their college education, not to mention teaching them important lessons about money.
In your own life, you might be ready to mix things up — whether by changing your job, your career, or moving to a new house. Perhaps even all three.
Everyone's situation and needs are different, but one thing is certain: After making it through two decades of adulthood, you've definitely earned a vacation. It's worth adding the dream trip you've been putting off for years to your to-do list as well. Just make sure you plan for it — as well as the following top financial priorities to focus on in your 40s — before you take off.
Save for your kid's college: Before you know it, the bills will begin
The cost of college continues to climb, leaving many families unprepared for what is likely the most expensive investment of their child's life. Covering every penny isn't realistic for most parents, but planning ahead can help mitigate future financial pressure.
If you haven't saved enough, or at all, start by setting a more achievable goal, like aiming to cover a quarter of your child's college bill. That's the amount paid on average by parents through savings and income, Business Insider's Tanza Loudenback reported. Loans, taken on by students as well as parents, account for another 27%, and scholarships and grants cover more than a third.
College savings are best accumulated in a 529 plan, a state-sponsored investment account earmarked for education that offers tax benefits for those who use it. Only 13% of families take advantage of the account, and those who do have average account balances of about $10,000, according to a survey from Sallie Mae.
Saving is just one step of the process, however. Talking openly with your child about the cost of college, and how you plan to pay for it, may lead to more careful decision making about where to go, and how to make the most of the four years. Plus, it gives them insight into how they might want to manage their own money after graduation.
Take stock of your career: If you're burnt out at work, you've got options
It's never too late to switch careers — plenty of successful people have done it — but before you make a change, it's important to understand any potential financial repercussions.
Most people hit their peak earning years in their 40s, according to data compiled by Payscale. Going back to square one now could significantly impact your future earning potential. And if your desired career-path requires an advanced degree, that means more years out of the workforce and more money out of your savings.
You might have better luck making incremental or small changes to your career, or looking for a new job in the same field. If you're burnt out, make sure you're using all of your vacation days, which can help reenergize you as well.
Earn money on the side: The benefits go beyond the extra cash
Rather than quitting your day job, you might want to turn a hobby into a profitable side business.
Besides the extra money, hobbies can also help improve your ability to think creatively, manage stress, and tackle mentally challenging tasks, Business Insider's Rachel Gillett reported.
If you love photography, home repair, or even just watching sports, you could earn $10 or more per hour in your free time, doing activities you already enjoy.
You may not make enough to leave your 9-to-5 job behind, but having the extra cash could help you save toward retiring early, or even provide a future source of income when you are ready to retire but don't want to stop working altogether.
See the rest of the story at Business Insider
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