Money and credit tips for your 30s and 40s

By Marianne Curphey

As you leave your carefree 20s and reach your 30s and 40s, your financial responsibilities grow practically by the day. You're probably a homeowner - or saving up to be one - and you may have started a family. And although your earning capacity is increasing, you have more bills and costs to cope with.

With all these additional responsibilities, you need to re-evaluate your financial plan and adjust it to fit your new day-to-day life. What worked 10 or even five years ago may need updating if you've added a mortgage or decided to work only part-time until your children are in school.

"The key is to have the right plans in place so that you are taking steps now to save for the medium term and for your retirement," says Sarah Hennigan, a certified financial planner and women's money coach, and founder of the website Money Clarity. money-tips-30s-40s

Here are some tips for organising your finances when you enter this time of your life:

1. Think about where the money is going -- and where it will go later.
Some advice is timeless, such as knowing where your money is going at all times. When you're in your teens and 20s, you may need to track where your money is going so that you don't risk reaching your credit limit or have to rely on your bank account's overdraft. As you get older and start earning more money, however, it can be easy to think: I've got it covered, so why does it matter?

But it does matter, as you can easily lose track of how much you're actually spending. While you may have enough money to pay for all your expenditures, it's foolhardy to not know where your money goes. Not only can such a mind-set lead to disorganised finances, but it can leave you vulnerable to fraud.

Keep an eye on spending and make sure you're still budgeting for each area of your life: necessities, entertainment, food, transportation, etc.

Finally, check your savings plan. Is it in line with your new lifestyle? It may no longer suffice to save only £100 a month now that you are a family of two or more. Your savings should be a percentage of your salary, not a static amount that you set back when you were 22. Your emergency savings, for instance, should be able to cover about three months' worth of your expenses. As your financial responsibilities have increased from age 20 to age 30, so should the amount you have saved for financial crises.

"You also need to think carefully about what you can and can't afford to do for your children as they get older," Hennigan says. "Will you be able to help them through college, or will that have a detrimental effect on your own finances?"

Talk about your family's finances with your partner and perhaps even older children so everyone is on the same page. This will help avoid money messes down the road.

2. Make sure your money is working hard for you.
Susan Hannums, co-founder and director of Savings Champion, a savings advice website, says in your 30s and 40s, finances may be tight - you might have children, be taking on larger loans, such as a mortgage, or simply be dealing with more responsibilities. As you truly enter adulthood, you should be looking to make your money work harder for you.

"If you have done the hard work of saving up an emergency fund, then you can begin looking for the very best current account that pays interest on savings," she says. "Check the terms and conditions, as different banks have different requirements, and find an account that rewards you for having a positive balance."

You also can take advantage of programmes to make your money work harder for you. For instance, if you are saving to buy your first home, you can make the most of the government's Help to Buy Individual Savings Account (ISA), Champion says. With the Help to Buy programme, the government will boost your savings by 25%. So, for every £200 you save, you will receive a government bonus of £50. The maximum government bonus you can receive is £3,000.

Now is also the time to get serious about retirement savings and revisit how much you're saving per month, if you're earning more.

3. Get smart about the way you pay off debt.
It may be that you are progressing well at work and earning more, or even receiving bonuses. It's tempting to start treating yourself to more expensive clothes or gadgets, especially if you find yourself trying to keep up with older colleagues.

And while it's useful to allocate some of your new money to savings, it's usually wiser to pay off debt, such as credit cards or loans. Even if you don't have much disposable income, there are ways of reducing debt that can make a big difference.

"If you do have credit or store card debt ... pay if off rather than having it hanging over you for years," says Sarah Pennells, of the money advice site Savvy Woman. You don't want debt from your 20s to still be haunting you well into your 30s.

If you have had outstanding debt for some time and only pay the minimum amount each month, it may be time to rethink your strategy. Your first step: Start paying more than the minimum, even if it's not much more.

"Sometimes when people know they can't clear the whole balance, they think paying off a bit more than the minimum payment won't really make any difference, whereas it can significantly shorten the time it takes to pay it off," she says.

Say, for example, you owe £1,000 on a card and are paying off the minimum each month (around 2.5% or £25) at the standard rate of 18.9% interest.

"If you were to pay only the minimum amount each month, it would take you 18 years to clear the debt," she says. "But if you doubled that monthly payment to £50, then the whole debt would be paid off in three years."

Another option to pay off your debts? Pennells points to 0% interest balance transfer deals, which can be useful for people who need time to get to zero. "Even if you only owe a couple of hundred pounds, you could clear it and then focus on sorting out other debts or beginning to build up your savings for the future," she says.

In many ways, your 30s and 40s are the most important time in your financial life, money experts say. You're finally earning enough to cover all your bills plus savings, and you're possibly setting up your kids' futures, too. Don't slack off during this important period just because money is no longer a "problem." Continue to be diligent and careful, and you'll set yourself up for success when you enter your 50s and retirement.

See related: Credit, finance tips for Brits in their 20s, 4 wrong ways to pay credit card debt, Make money while using your credit card

Published: 31 August 2016