Turning 40 can feel like a milestone, and your finances are no exception. By this point, you’ve likely built a career, managed some big expenses and learned a few lessons along the way. But the years leading up to 40 are a prime opportunity to fine-tune your money habits and set yourself up for long-term security. From strengthening your safety net to making smarter investment choices, the moves you make now can help ensure the next decades are less stressful and more rewarding.
5 Things to Do With Your Money Before You Turn 40
Design a Budget That Works for You
If “budgeting” makes you want to cover your eyes, you’re not alone. But creating a budget can be as simple or complex as you need, and it can be completely customized for you.
Think of a budget as your money roadmap. It helps you see where your cash is coming from, where it’s going and how to keep more of it in your account.
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- Write down what you earn each month.
This is your after-tax income — the money that actually hits your bank account. - List your must-pay expenses.
Rent/mortgage, utilities, groceries, transportation, loan payments…this is the stuff you can’t skip. - Add your “fun” spending.
This includes dining out, streaming subscriptions, hobbies or shopping. It’s the things you enjoy but can adjust if needed. - Set a savings goal.
Even if it’s small, choose an amount to save each month. Treat it like a bill you have to pay. - Track and tweak.
Compare your actual spending to your plan. If you’re over in one category, adjust somewhere else.
- Write down what you earn each month.
Next steps: Start tracking your monthly income and expenses and create a savings goal to begin working toward.
Start Saving for Retirement
The best time to begin saving is always now, even if it’s not a lot of money. That’s because no matter how much you save now, you’ll be maximizing your investment through the time value of money. By the time you retire, the $500 you added to your account 40 years ago will have grown quite a bit.
There are a variety of ways you can start saving for retirement. Many workplaces offer a 401(k) setup or something similar. If yours does, and especially if they’ll match your contribution, take advantage of it.
You might also want to set up a separate retirement savings account, such as an individual retirement account (IRA), through a financial advisor. These types of accounts offer numerous benefits, and if you’re married, you can combine your account with your spouse’s for a fuller picture of your joint finances.
Next steps: Learn more about IRAs and other retirement savings accounts
Create an Emergency Fund
Building an emergency fund for unexpected home repairs, large medical bills, a job loss or other significant purchases is important for financial stability and peace of mind. But you may feel uncertain about where to start or if you even have any extra money to set aside.
A general rule of thumb is to have an emergency fund of three to six months’ worth of living expenses in cash or a readily accessible account, like a savings account with a low or no minimum balance to avoid fees. This can help you manage unexpected costs without relying on credit cards or high-interest loans to cover the additional expenses.
Start small by including an emergency fund line in your monthly budget and setting aside a certain amount each month. It will start adding up faster than you think!
Next steps: Learn more about setting up an emergency fund from our banking experts
Know (and Boost) Your Credit Score
A good credit score is crucial for obtaining loans with favorable terms, like a mortgage or auto loan. To improve your credit score, make sure to pay all bills on time, reduce your credit utilization ratio (the amount of credit you’re using compared to what’s available) and regularly check your credit reports for errors.
Additionally, if you’re just starting out, responsibly managing a credit card or a small loan can help establish a positive credit history.
Some credit cards allow you to check your credit score for free. If yours doesn’t, you can still obtain a free credit report from the three major credit bureaus each year. If you see something that looks incorrect, you can dispute it and have it removed, which can boost your credit score.
Next steps: You can get one free credit report each year from each of the three nationwide credit bureaus. Check yours and see how you’re doing.
Learn to Live Below Your Means
While this isn’t a one-time action like the other items on this list, it’s one of the most important money mindsets you can adopt.
Living below your means starts with small, intentional choices. Track where your money goes, prioritize needs over wants and give yourself time before making big purchases. Trim expenses that don’t add real value, and set up automatic savings so you’re building security without thinking about it.
As your income grows, it’s tempting to let your spending grow alongside it, but that can undo your progress. Instead, keep living like you did before the raise, directing most of the extra money toward savings, investments or paying off debt. Treat lifestyle upgrades as intentional decisions, not automatic reactions. This way, your financial security grows faster than your expenses, giving you even more options and flexibility down the road.
Next steps: Identify one area where you can cut back to save for what really matters — whether it’s curbing impulse spending or settling for a less expensive option.
Let’s Talk About Your Financial Goals
At Fidelity Federal, we’re here to help you achieve the goals that matter most to you. Whether it’s owning a home, paying off debt or building your retirement savings, we can help.
Schedule your free financial check-in with our team and get expert, personal advice from people right here in Delaware.
