How to master money... in your 40s
Discover how to navigate estate planning, insurance, take control of your mortgage and your money story, and boost your super in your 40s.
Hey lady, here’s a snapshot of what it’s like to be an average, 40-something woman in Australia right now:
You’re doing the bulk of the care work (women make up 70% of primary carers - more on The Invisible Work of Women here) +
You’re working longer hours in paid employment than previous generations (increasing 15% over the past 3 decades) +
You might be recently divorced (43.2 is the median age for divorce in Australia) +
You’re earning as much as you’re ever going to (women’s income peaks during our 40s, while for men it’s in their 50s).
Of course that’s on top of the unique and complex challenges you may be facing as a result of your other intersecting identities. The truth is - our 40’s are a unique decade for many reasons. Whether it’s raising kids, supporting ageing parents, caring for a sick partner, navigating a busy career, meaningfully contributing to your local neighbourhood, or becoming a respected Elder in your community - none of those things, or all of them at the same time - it’s no wonder some call your 40’s the ‘sandwich generation’, and why you’re probably feeling a bit overwhelmed.
Women in their 40’s are performing one hell of a juggling act and, as you’d guess, these mounting responsibilities come at a cost: they impact our capacity to take care of our money now and present a massive challenge to saving for our retirement. While we know most women are pretty great at juggling the many balls that life throws at us, at Ladies Talk Money we’re here to try and make it a little easier for you…
So, let’s dive into our practical tips to help you master your money in your 40’s.
The role of money stories in your 40s
Once we reach our 40’s, we have a few decades of life experience under our belt (and the grey hairs to prove it), plus, with any luck, we still have plenty of good years ahead to build our version of a wealthy life. By the time they reach the big 4-0, many women report leaving the anxiety of their 20’s behind, the hustle of their 30’s in the wind, and are here ready to embrace a life of less f*cks and more bucks. But many of us may still be living the cultural and ancestral trauma, and money stories, of generations that have gone before us. It’s important to acknowledge the weight of this, at the same time as knowing that your (money) story is not set in stone.
If you’re yet to reflect on or engage with your money story, your 40’s shape as a good time to take stock of where your attitudes and beliefs about money came from and to identify what you want to shift going forward.
It all starts with giving yourself time and space to dig into your earliest memories with money to uncover the foundational beliefs influencing your money decisions. After that, you can start tracking and reviewing your current money habits to see what trends come up for you. Remember to be kind to yourself and take your time to unpack your own money story without guilt or shame. The best bit? You have the power to write and shape your own path forward.
For some inspiration, check out our Mums and Money article, or download our free How To Talk About Money Guide.
Investing in your 40s
During our 40’s we’re likely to be at the peak of our earning potential, which means now is the time to double-down on your investment strategy. With retirement closer than ever before, our 40’s are the decade to turn our attention to our asset allocation (money jargon for the process of deciding which investments to buy, or the money you ‘allocate’ to each ‘asset’).
Our 40’s are the time to ensure we’re invested in a diverse range of assets that will grow in value during the decades ahead - while still protecting us from the ups and downs of the market. Unlike our 20’s and 30’s, we have less time for our investments to recover from significant losses, so speak with a financial adviser to ensure your asset allocation is going to help maximise your returns.
Thinking about dipping your toe into investing in shares? Lady, it’s not too late! Really, it isn’t. Start by thinking about what your investment goals are, whether that’s securing an early retirement or having extra wealth accumulated for a rainy day, and how you can use your money to vote for the kind of world you want to live in.
Although all investments come with a level of risk, it’s important to consider how comfortable you are with risk when starting your investing journey. Next, map out how much you would be looking to put into a regular investment plan and think about where you want to invest your money. It’s important to look into the type of companies you’d be supporting with your money as well as the investment approach itself from the get-go. Plus, to get the best deal, take a look at the net performance and fee figures for the investments you’re considering before getting started.
The other thing you might want to invest in your 40’s, is YOU! This goes for any generation, but as you know, we’re living longer and need to become more self-sufficient during retirement, which can mean we’re working until later in life. So, now could be a great opportunity to invest in yourself to further advance your career and income opportunities.
No matter what work looks like for you, consider ways you can continue to upskill and boost your chances of income growth during your 40’s and beyond. That could be organising development or training at work, building your qualifications by completing online courses in your field, starting your own business, or finding a mentor that can help you navigate the next step in your career. There’s no reason you can’t apply the same rigour to investing in yourself as you would the share market.
All thing property in your 40s
Due to the rising cost of living, many of us are purchasing properties later in life. If that’s the case for you (which we absolutely acknowledge is not the situation for everyone), then one of the best things you can do for your money during your 40’s is to find ways to pay off your mortgage faster.
There are a few ways to pay off your mortgage sooner than your loan terms, including reviewing your current mortgage repayment schedule. If you’re in a place to do so, making extra repayments above the minimum requirements can help cut down your mortgage faster. Plus, if you have the means to increase the frequency of your repayments, you’ll also be able to sneak in extra repayments each year that will significantly reduce your debts.
Pssst… do you know if you’re getting the best rate on your loan? This is probably something you’ve heard Ladies Talk Money Co-Founder Chandel banging on about - but make sure to check your current interest rate and compare it with other loan providers to see how competitive your rate really is (or have a mortgage broker do it for you, for free!). This can help you lower your fixed costs (a.k.a. how much you spend on your mortgage repayments each month) and help free up extra money to put towards your savings and retirement goals.
Superannuation in your 40s
If you take one tip away from this guide, make it this: now is the time to boost your super. To maximise your chances of a comfortable retirement, finding ways to grow your super during your 40’s will help increase the value of your retirement savings.
There’s a couple of ways to do this:
Voluntary contributions: for those who want to increase their superannuation, you can add additional money to your super from either your pre-tax salary (known as “concessional contributions”) or your post-tax earnings (known as “non-concessional contributions”). For more on what these types of voluntary contributions actually mean visit Canstar’s website here.
Salary sacrifice is when you decide to ‘sacrifice’ an additional portion of your pre-tax salary into your super fund, through your employer. Along with tax benefits, contributing that little bit extra into your super over time can really add up when it comes time to retirement. Hello compound interest!
Choose a more aggressive portfolio mix: this is all about checking how your super is allocated. Take the time to see how much of your super is allocated to growth assets (such as shares) vs defensive (cash or fixed interest investments) assets. If you’ve got a long time before you’ll need to access your super, it might be worth going with a higher percentage of growth assets. Plus, make sure to regularly review your asset allocation to check it's still the right mix for you.
Hey lady! Want to sharpen your financial toolkit and master more jargon terms like ‘compound interest’? Check out our guide to unscrambling money lingo here.
Another hot super tip: do a quick review of your current super fund and ask yourself:
Is it all in one place? If not, is there a good reason?
What am I invested in?
Do the companies I’m invested in align with my values?
What is the performance of my fund versus the fees I pay?
Is my super fund portfolio aligned with my appetite for risk? (Not sure what this means? Check out Jess’ guide to navigating risk, investments and super here.)
Insurance & Estate Planning in your 40s
If 2020 has taught us anything, it’s that we never know what is around the corner, which makes estate planning a big priority for all of us. So, what are some practical steps you can take to get your affairs in order during your 40s?
Make sure you have a will: this legal document is the best way for you to ensure your assets go where you want them to, so make sure you have one prepared (and that it’s up to date and aligned with your wishes).
Check your Super and Insurance beneficiaries are up-to-date: to make sure your superannuation and insurance pay-outs go to the right place in the event of your passing, it’s important to keep your nominated beneficiaries (money jargon for the person you choose to receive your super and insurance benefits if you die) up-to-date. You can check directly with your insurer and super fund to see if your nominated beneficiaries are current and if they are binding or non-binding.
Consider Power of Attorney & Guardianship: want to ensure your wishes will be followed even if you can no longer make them yourself? It’s a wise idea to consider a Power of Attorney and understand when Guardianship could be useful.
A power of attorney is a legal document that lets you choose a person to make financial decisions for you..
An Enduring Guardian is someone you appoint to make health, lifestyle and medication decisions for you if you were to become incapable of making these decisions yourself due to illness or accident.
Speaking of preparing for the unexpected, it’s important to protect your most valuable asset: you. Your capacity to earn is one of the greatest assets you have (in this capitalist patriarchy) and can amount to thousands of dollars over your lifetime. That’s where considering Income Protection (IP) insurance comes in! Income protection enables you to receive 75% of your income if you need to step away from work due to illness or injury.
And if the last few months have taught us anything, it’s to prepare for the unexpected. While there aren’t any inbuilt exclusions for pandemics in IP insurance, it’s important to check with your insurer as the specifics of coverage vary from fund to fund. If you’re considering taking out IP insurance off the back of COVID-19, make sure to find out what waiting periods might apply and what level of cover is most appropriate for your situation (when in doubt, have a chat with a financial adviser who can steer you in the right direction).
Plus, income protection is generally tax-deductible and affords you the space to focus on recovery without the financial stress of mounting debt and unpaid bills.
There are other types of personal insurance to consider as well, including:
Critical Illness (a.k.a. Trauma Insurance): provides a lump sum payment to cover the costs associated with a major, traumatic event to help you focus on recovery and getting back to work.
Total Permanent Disability (TPD) Insurance: provides a lump sum payment if you’re unable to work again due to serious injury or illness.
Life Insurance: provides your loved ones with financial security in the event of your death.
*Remember!* Check the fine print when it comes to insurance! Be sure to dig into the actual, specific definitions used in your cover to understand exactly what you can claim. Do your research and shop around to find the most appropriate type of insurance to suit your needs, lady. Many of us can access insurance through our super funds with premiums being deducted from our balance, or we can look at providers outside super.
Divorce & separation in your 40’s
For those of us navigating divorce and separation during our 40s, you’re not alone. In fact, the most common age for women to seek a divorce is between 40 and 44 in Australia. What’s more concerning is that for those of us who divorce during our 40s, stats have shown that we’re still bearing the financial burden for decades to come, well into our 60s and 70s.
One of the biggest challenges during divorce and separation (aside from the obvious) is how to divide your money and assets after the relationship breaks down. For many couples, deciding how to split assets (a.k.a. all the stuff you own together such as property, shared bank accounts, cash, investments, super and more) can be a complex and difficult decision. To help you navigate this process, here are a few things to keep in mind:
Update all of your shared accounts to separate your money (this could include closing any joint accounts and credit cards).
Make sure to seek legal advice from a family lawyer or community legal centre (who can offer free legal advice to those in need), if you’re unable to reach an amicable decision when dividing assets and property.
Divide your super as it’s likely to be one of your biggest assets! Super can be divided between you and your partner if you divorce or separate (find out more about the steps to do so here).
Other important financial conversations to have in your 40’s
As we’ve mentioned, the exact makeup of our forties are different for everyone, with some of us just starting families, changing careers, having to care for older parents, or perhaps facing a difficult diagnosis of our own. You could be facing none of those, or all of those. There are also huge gender and cultural differences in Australia that lead to very unequal outcomes in life expectancy and financial burdens in our 40’s. While it’s impossible to provide ‘one size fits all’ tips to cover the diversity and complexity of women’s lived experiences - we did want to touch on having conversations with parents or Elders about their financial situation and plans during retirement.
Nearly 30% of us will end up providing some level of financial support to our parents during their retirement. Whether they need your help or not, their plans may have an impact on your financial future. Will your parents be living with you, located nearby or residing in an aged care facility? Whatever the situation is, having a proactive conversation about it now can help you prepare for what the next few decades could look like.
Here are a few important questions to get started:
Do they have a mortgage or other debts?
What are their plans for long-term care?
What insurance coverage do they have?
Have they prepared Estate Planning documents such as a will? And, most importantly, do you know here to find them?
We absolutely get it: talking about money with our family is complex and complicated. But, these conversations are so important to ensuring everyone is on the same page.
Need a hand starting these money chats? We’ve got you, lady! Check out our guide to talking about money here.
So, there you have it! Congrats lady, you’re well on your way to mastering money in your 40’s. There’s a LOT of info in here, so bookmark it and come back whenever you need to. Remember, it’s not too late to start planning for your retirement and getting a handle on your finances, and we’re here for you every step of the way.
Got any other tips to share with your fellow 40-something ladies? Get in touch with us → hello@ladiestalkmoney.com.au and help a sister out mastering her money!
Hey lady! Any finance information provided in this post is general advice only. You should always seek independent, tailored advice before acting on it, or reach out to us to discuss your individual circumstances and needs.