Financial freedom is not about having everything handed to you, but rather knowing when and how much risk to take in order for your money to grow. I'm highlighting 10 important things you need to do to be financially free at 40!
Being financially free at 40 is a dream come true for many people in the workforce. For most, it's a matter of putting away money from an early age and seeing that savings grow into larger sums over time. Anyone can achieve this goal with enough patience and consistency. If you're looking to follow in the footsteps of others who have reached financial freedom through smart investing, look no further!
Learn How to Be Financially Free at 40
Don't worry if you haven't been able to invest until now. You can still make up for lost time with a little bit of effort on your part. All you need is a plan and a good understanding of how the stock market works. best way to get started is by choosing a good investment plan. The best way to do that is by reading articles like this one and learning how to invest in the stock market.
Once you've got your game-plan down, it's time to start making investments! It's unwise to invest too much money at first, so beware of high risk investments. This can be tricky because they often promise high rewards. If you don't want all your savings to disappear into nothingness, go for low risk investments or just play it safe with certificates of deposit.
Why You need to Be Financially Free in Your 40s
The number one reason you need to be financially independent by 40 is because it gives you control of your future. You can say goodbye to jobs that don't treat their employees well and hello to more time on your hands. Whether you want to travel the world or spend more time with family and friends, being financially free will allow you the luxury of choosing what you really want out of life.
What's stopping us from achieving financial independence at 40? Truthfully, there's nothing that stops any person from achieving financial independence at any age, it all depends on how badly they want it. The only thing stopping some people is lack of motivation, which can easily be changed if someone sets a reasonable goal like “I'm going to save $300 every month until I'm 40.”
Achieving Financial Independence: How Difficult Can It Be?
It's easier than you think. The only thing standing between you and financial independence is hard work. If your job doesn't pay well or it tends to stress you out, quit! There are plenty of jobs available for someone who isn't afraid to go after what they want and take control of their life.
There will be challenges along the way, but if we look back on our lives we all have obstacles and hardships that we had to overcome. Set a goal for yourself and do whatever it takes to achieve it—you'll be happy with what happens next.
10 Things You Need to Do to Be Financially Free at 40
Being financially free at 40 is not the end game—it's just the beginning. Once you've hit that milestone, it's important to expand your financial knowledge and try different investment types. Most people find success best when they diversify their investments by looking for high risk opportunities as well as low risk endeavors.
Be smart about your spending
Don't spend everything you have on a fancy car or a lavish lifestyle. Instead, be reasonable with your expectations and save as much money as possible. Save money and become financially independent by saving as much money as possible. This will give you more time with family or friends if that is what you want.
Having smart spending habits also gives you the ability to spend your time doing things like traveling, exploring different hobbies, or just taking some down time. When saving is a priority, it becomes easier to achieve financial freedom at any age – no matter how old you happen to be right now.
Save money for retirement
Nothing is more important than knowing your future is financially secure even after you stop working for others. Having enough or best, more than enough retirement funds will allow you the opportunity to pursue your passions without worrying about what will happen once you're too old to work.
Retirement is not a bad thing to worry about. You should always have some money set aside for the future so you can live comfortably when you get older. Not only will your retirement savings give you the option of retiring early if that's something you're eagerly looking forward to, but it will also help a lot if anything eventful happens and you need to take time off work.
Invest in stocks with proper research
There are plenty of ways to invest money and most of them have equal chances of success or failure so it all comes down to the level of risk you're willing to take on.
Make sure to do your own research and to not put all your eggs in one basket. Practice diversifying your investments so that you have money coming in from different sources. Once again, it's important to remember that some places are riskier than others so be smart when making investment decisions.
Reach out for help if necessary. No matter how much research you do, there will always be someone who knows more about a specific topic. Whether it's an accountant or a financial advisor, don't be too proud nor shy to ask for help if you need it.
Be financially free at 40 by investing in real estate
Real Estate is an excellent investment because it will never go out of style. Focus on low cost properties before you take on costly investments. Rent out extra rooms!
Also, make sure that any property you invest in has cash flow potential. Never buy depreciating assets. You might hear others talk about how much money they made off their home value but remember that real estate prices fluctuate often so don't invest too much of your hard earned money in one place.
Learn about inflation
Inflation is a way of life and it's important that you learn how this economic phenomenon can affect your savings, investments and retirement accounts.
It's easy to put hard-earned cash into savings accounts and investments that won't fluctuate based on inflation. However, if you want your money to grow rather than lose value over time, you'll need to learn how inflation impacts the economy and what you can do about it.
Know when to cut your losses
Sometimes there just isn't a happy ending in sight, so if you're investments don't seem like they'll ever pay off—it may be time to cut your losses. This doesn't mean giving up, rather it's an opportunity for growth so next time around you'll have a better understanding of what might work instead of what clearly won't.
Don't buy a home until you can afford one
Home ownership seems like a great idea but sometimes we get so caught up in the idea of it that we fail to see that there are better ways to invest our money. For example, instead of taking on a huge mortgage, you can buy your home in cash.
Sure, you'll lose out on certain tax deductions but in the end you'll be able to sleep at night knowing your investments are safe and sound, rather than getting stuck with two mortgages when housing prices drop.
Take risks, too!
The only way to achieve financial freedom is by taking big risks. Sure, there's a chance they won't pay off but that's why it's called “taking a risk.” You have to be willing to accept the consequences if things don't go as planned.
Taking risks once in a while with careful research and planning will help you get to where you want to be in terms of financial freedom.
You'll never know what will work or if your investments are safe unless you give it a shot. What do you have to lose?
Learn to differentiate between needs and wants
The great thing about your 40s is that you've got so much knowledge under your belt, it's impossible for you not to know the difference between what you need and what you want.
Take control of your finances by making sure that everything you own has purpose. Don't spend too much money on frivolous items—that money could be put to better use by investing in something that brings in income.
If it doesn't bring income, don't buy it! It's as simple as that. Use this strategy to help achieve financial freedom sooner rather than later.
Be prepared for change
Learning how to achieve financial freedom isn't easy but it can be done with a little bit of sacrifice. Now that you know what it takes to achieve such a lofty goal, make sure you're prepared for the long haul.
Be ready for change because it will happen more often than not. Even if nothing changes, be prepared for an emergency fund in case something unexpected happens, which is why living below your means is so important and of course, less stressful.
If there's one thing you take away from this article let it be this: The higher your income, the better your chances of achieving financial freedom are due to having extra money to invest every month, so it's a must to build multiple streams of passive income as early as possible.
Invest that money wisely and then use whatever you have left over to live on comfortably—all while working toward future investments or retirement savings.
Read the Entire Financial Freedom Series
- What is Financial Freedom, Really?
- My 12-Step Financial Freedom Checklist
- 14 Point Checklist for Your Year End Financial Checkup
- 6 Steps to Make Your Financial Assets Work Harder in 2021
- Road to Financial Freedom: Steps to Take to Be Financially Secure