Financial Planning in Your 30s and 40s

By Chris Duderstadt

September 13, 2023

Financial Planning in Your 30s and 40s

Key Points – Financial Planning in Your 30s and 40s

  • Outlining Short-Term and Long-Term Goals and Planning Accordingly
  • The Importance of Diligently Saving
  • Thinking About the True Meaning of Family Financial Planning
  • 9 Minutes to Read | 24 Minutes to Watch

Financial Planning in Your 30s and 40s

Even if you aren’t close to retirement, financial planning in your 30s and 40s is critical. And if your 30s and 40s feel like they were another lifetime ago, that doesn’t mean that financial planning in your 30s and 40s doesn’t apply to you. What we’re going to cover in this article will still apply to your children and/or grandchildren. Two of our CFP® Professionals, Logan DeGraeve and Matt Kasper, are going to help us with reviewing some key financial planning strategies to consider in your 30s and 40s. Logan just turned 31 and Matt is about to turn 41, so this topic of financial planning in your 30s and 40s is right up their alley.

Oftentimes, the people we’re serving at Modern Wealth will come to us when they’re about five to 10 years away from retirement. So, why are we talking about financial planning in your 30s and 40s? There’s a challenge with that with projecting where you’re going to be at once you’re going into retirement. It can be hard enough to take care of your family, let alone project what your retirement could look like. Think of it this way. You’re not retiring toward something; you’re retiring from wherever you’re at at that stage. The steps that we’re about to review can help paint a picture of the importance of financial planning in your 30s and 40s.

1. Creating a Forward-Looking Financial Plan

Creating a comprehensive financial plan comes in at No. 1 on our list of things to do when financial planning in your 30s and 40s. You’ll quickly see why it’s No. 1, as it relates to every other item on our list. From taxes and investments to estate planning and insurance, your financial plan considers every aspect of your financial life as you approach and go through retirement.

“It all starts with your financial plan, and it needs to be forward-looking. When you’re in your 30s and 40s, you need to define what your forward-looking plan looks like. Your expenses will be different in retirement, but your lifestyle may not change a whole lot.” – Logan DeGraeve

It’s imperative that your financial plan is customized to you and that it’s up to date. Having a fluid plan that you regularly review is important because it needs to change as your life changes. Whether you’re beginning to build your financial plan or you’re reviewing it, we highly recommend doing so with your spouse. Regardless of your situation, we have a resource that can help you figure out where you’re at as you’re financial planning in your 30s and 40s. It’s our Retirement Plan Checklist, which gauges your retirement readiness with 30 yes-or-no questions and an age-based timeline of retirement considerations. Download your copy below!

Financial Planning in Your 30s and 40s

Retirement Plan Checklist

2. Defining Your Goals

While your financial plan details every aspect of your financial life, the foundation of your plan actually has nothing to do with finances. Your plan should be goals-based. Before you even start thinking about money, what do you want to accomplish in your 30s and 40s? The list of goals for this time of your life can be quite long. They can include getting married, starting a family, building your own business, buying a new home, taking vacations, etc. Maybe you’re ambitious and want to retire in your early 50s.

Those are just a few examples of some generic goals for your 30s and 40s. But even if you and your best friends have some of the same goals that we listed above, they will likely be different in their own way. There are so many different nuances with planning a wedding, building a family or business, what you want in a home, where you want to go on vacation, etc. That why a big reason why it’s important to be detailed with defining your goals.

And again, we need to be forward-looking here. What do you think you and your spouse’s goals will be in retirement? How might those differ from your current goals?

“Try to think of some of those budget shifts that might take place in the transition into retirement. What are your expenses now compared to what they could look like in retirement? It might surprise you. You’re likely going to be more in retirement, meaning you need to have more discretionary type of income to truly enjoy what you’re trying to do.” – Matt Kasper

3. Creating a Spending Plan

No. 2 and No. 3 on our list of financial planning in your 30s and 40s go hand in hand. That probably became evident as we were wrapping up our last point. Once you define your goals, it’s time to create a spending plan. In addition to putting a price tag on your goals, make a list of your monthly expenses such as food, mortgage payment, utilities, etc. And how do your expected expenses compare with your income?

That can begin to give you a baseline for your spending plan, but there are a couple more crucial factors that need to be accounted for as well. The past couple of years have served as an important reminder that inflation needs to properly factored into your plan. Keep in mind that your expenses will inflate at different rates. Your mortgage won’t inflate at all, but then you have health care expenses that inflate even higher than consumer goods.

“Think again about the goals that you’ll need to attack in your 30s and 40s. How do you attack your mortgage because most people in their 30s and 40s will have one. College is not going to get any cheaper. Health care and college inflate differently than the basket of goods at the grocery store.” – Logan DeGraeve

Speaking of health care, there are going to be unexpected expenses that arise as you’re financial planning in your 30s and 40s (and throughout your life). Do you have emergency funds in a safe position of your portfolio? Of course, insurance can be a big help with many of those unexpected expenses. We’ll go into more detail on insurance later on our list, but nevertheless, it’s important to live within your means at this stage of your life.

“If you’ve ever been in a position where you have something break down in your home and didn’t have a sufficient emergency fund in place, it adds so much pressure to your life. If you’re single, I recommend keeping six months of spending within an emergency fund. If you’re married and have roughly equal income, you should have about three months of spending within an emergency fund.” – Matt Kasper

4. Knowing the Difference Between Good Debt and Bad Debt

As you’re financial planning in your 30s and 40s, debt is likely going to be in the picture in some way, shape, or form. Do you still have student loans, personal loans, or credit card debt that has high interest associated with it? That’s the kind of debt that you need to make sure and pay off ASAP.

But you can have good debt, too. Your mortgage could be an example of that depending on your interest rate and if your investments can help to keep the debt at a minimum.

“Mortgage rates were hardly anything—2.5%, 3%, 3.5%—not that long ago. Now, those rates are long gone and they’re in that 7% to 7.5% range. But having a mortgage at 3% isn’t a bad debt.” – Logan DeGraeve

When you have debts at low levels, you’re pretty much leveraging those types of loans. Liquid daily money markets are paying 5% to 5.25%, so you’re winning there. The bigger focus for financial planning in your 30s and 40s is the bad debt.

5. How Much Are You Saving … And Where Are You Saving to?

Saving diligently is a critical part of financial planning in your 30s and 40s, especially if you’re wanting to retire early. If you haven’t started contributing to your employer-sponsored 401(k), that’s a great way to save for retirement. But don’t just blindly save and have no idea what you actually own in your 401(k).

This is why it’s important to use two different bucketing strategies when you’re saving. The first bucketing strategy to consider is saving to short-term, medium-term, and long-term investment buckets. For those unexpected expenses/emergency funds that we mentioned, you’ll want to have those in a safe account that is easily accessible.

The other bucketing strategy comes down to taxes. Are you saving to a taxable, tax-free, or tax-deferred account? When you’re saving to your 401(k), are you saving to the Roth (tax-free) or the traditional (tax-deferred) side? By saving to the traditional, you get the tax break now but will be taxed when you take your IRA distributions. By saving to the Roth, you pay the tax on the contribution but get the benefit of the tax-free growth on the distributions.

“Tax planning in your 30s and 40s is so important. You’re trying to accumulate wealth at this stage. You need to have discipline with getting your savings in place and figure out the best path.” – Matt Kasper

There’s a lot to consider when saving to Roth or traditional. What tax bracket are you in today compared to what tax bracket you’ll be in in retirement? Keep in mind that tax rates will go up in 2026 since the Tax Cuts and Jobs Act is scheduled to sunset on December 31, 2025. That’s a big deal, but it’s still anyone’s guess if Congress will do anything to change that or what they’ll do long-term.

In addition to consulting with a tax professional to see what tax planning opportunities might be available to you, we encourage you to review and download our Tax Reduction Strategies guide below.

Financial Planning in Your 30s and 40s

Download: Tax Reduction Strategies Guide

6. Proper Risk Management

Next up on our list of things to do when you’re financial planning in your 30s and 40s is having proper risk management. Let’s start by circling back to health insurance. When you’re financial planning in your 30s and 40s, you’re likely in a situation where you’re still working and have health insurance through an employee-sponsored plan. Once you retire, though, that’s no longer the case.

Many people wait until 65 to retire because that’s when you’re eligible for Medicare. But if you’ve done a good job of saving diligently and want to “retire early,” have you looked into health insurance options on the market place? Yes, they can be pricey, but if you have the means to pay for it and want to retire, it’s something to consider. You might not be at that point when you’re financial planning in your 30s and 40s, but it’s certainly something to keep in mind as you’re planning.

Health insurance is one of many insurances that should be a part of your overall financial plan. There’s home insurance, life insurance, disability insurance, property and casualty insurance, car insurance—the list goes on. Each of them can play an important role as you’re financial planning in your 30s and 40s. Make sure that you review and update your insurance coverages as necessary.

“We all understand that insurance comes with a premium. You might be at a stage where you don’t want to take on additional costs. But how do you get some protection in place?” – Matt Kasper

Matt has a wife and kids. If he passes away, his wife would rely on insurance at this stage to continue her same lifestyle and keep up with house payments, etc. Hence why it’s critical to plan for the unexpected.

7. Do You Have an Estate Plan?

Along with making sure that you and your spouse are properly insured, what about your kids and other family members? If you passed away unexpectedly or had a medical event that left you incapacitated, do you have an estate plan that outlines what you want to have happen?

Whether you have a will or want to go the extra mile with creating a trust, it’s critical to clearly state how you want your assets to be distributed upon your death. Part of financial planning in your 30s and 40s should be reviewing your beneficiaries and updating them when necessary.

“At a minimum, get a will-based plan in place with guardianship provisions. Make sure you have power of attorneys in place.” – Matt Kasper

8. Working with a Team of Financial Professionals

So, whether you’re wanting to retire a few years from now or in a few decades, there are several retirement considerations to keep in mind as you’re financial planning in your 30s and 40s. It’s an extremely tall task to do take on the responsibility of financial planning for yourself and your spouse at any age. That responsibility is more than one person’s job if you’re taking financial planning seriously.

We can’t stress enough how important it is to work with a team of financial professionals. That team should include a CFP® professional that puts your interests first as they’re building and reviewing your goals-based plan. Your CFP® professional should be working side by side with a CPA that reviews your plan from a tax perspective.

Our CPAs are in-house at Modern Wealth. The same goes for estate planning, investment, and insurance specialists. Our team works together to help our clients achieve their financial goals. The financial planning in your 30s and 40s can go a long way toward securing your financial future.

If you want to learn more about what financial planning in your 30s and 40s looks like for you, let us know. You can schedule a 20-minute “ask anything” session or a complimentary consultation with one of our CFP® professionals by clicking here. We can meet with you in person, virtually, or by phone.

We Can Help Your Loved Ones, Too

Again, if you’re already retired but have children or grandchildren who are in their 30s and 40s, we welcome the opportunity to assist with their unique financial planning needs. Family financial planning is truly what it’s all about with building generational wealth. We’re ready to build them a plan that can help with giving them confidence that they’re doing the right things with their money, freedom from financial stress, and more time doing the things that they love.

Financial Planning in Your 30s and 40s | Watch Guide



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Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.