Financial Checklist Before You Hit 40

Picture this: You are about to turn 40. You have built a career, learnt from your experiences, and earned wisdom that only time can teach. However, when you examine your finances, your investments seem scattered no emergency fund, no clear retirement plan, and your savings are invested in too many diverse avenues.

If this makes you feel uneasy, don’t worry. You’re not too late.

Know Where Your Money Goes

In your 30s, you may be juggling your income between EMIs, luxuries, dependent family members etc. Here, understanding your spending habits can help you create a fool-proof budget. Remember, budgeting is not about restrictions; it is about financial awareness. You could use simple Excel sheets to break your monthly income into:

• Fixed expenses like rent, fees, EMIs, etc.
• Variable expenses like food, clothes, etc.
• Savings and Investments

The 50-30-20 rule of finance is a good thumb-rule; it suggests allocating 50% of your income towards needs, 30% towards wants and the remaining 20% towards investments and SIPs, which will help your money grow over time.

Have Adequate Insurance

If you are someone’s provider, you are also their financial protector. Health and life insurance are not luxuries; they are essentials. Insurance plans are financial tools that hedge against the cost of unexpected expenses, which can be unbearable and cause a significant dent in your finances. Having insurance for the unforeseen ensures that you do not end up utilising your ‘savings’ as your ‘emergency funds’, and your finances remain within your control.

Maintain an Emergency Fund

Do you recall the India-Pakistan political tensions that arose in the early months of 2025? At that time, experts reminded the public to keep ‘Emergency funds’ in hand. Why?

Emergency funds are a financial backup for when you experience a sudden drop or discontinuance in your regular income. This could be due to a career break. An emergency fund also comes in handy when you are faced with an unexpected and unplanned for financial emergency. An example of this is a sudden illness that requires immediate medical attention which comes at a substantial cost. The ideal emergency fund should be equivalent to around 3 to 6 months of your family's monthly expenses.

Start Investing

If you are still saving in gold and fixed deposits, you are exponentially missing out on something important. Investing in instruments like mutual funds, NSPs, or stocks enables your money to grow faster. However, you must consult a financial planner or someone who is investment savvy to ensure that while you include these products to your portfolio, you are still maintaining a manageable level of risk. The earlier you start investing, the easier it is to grow your wealth in the long run.

Will & Nomination

Ensure your finances can speak for you even if you're not present. Assign nominees to all your accounts. Draft a simple will and consolidate your documents, insurance, investment, property, etc.

Clear Bad Debts

Not all debt is evil, but mounting credit card debt can have adverse implications for your finances. Before turning 40, aim to reduce high-interest liabilities. While a home loan can be considered an asset builder, personal loans and EMIs for gadgets or trips should be minimised. Prioritise clearing credit card dues and refinancing loans if the interest rate is too high.

Financing Aspirations & Retirement Planning

At 40, you’re usually planning for two opposite timelines: first for your child's college and/or marriage expenses and second, for your own retirement. Start SIPs for both. Use online calculators to estimate future values and inflation-adjusted targets. For retirement: Consider NPS or retirement-focused mutual funds.

Towards funding your children’s milestones, consider Sukanya Samriddhi, Beti Bachao Beti Padhao if you have a daughter. Otherwise, regular mutual funds can work well for such goals.

Credit Score

A healthy credit score of 750+ ensures easy access to loans in the future. Download free reports from CIBIL, Experian, or CRIF once a year to check for Loan defaults and fraudulent entries.

The choices you make today will shape the financial freedom you enjoy tomorrow, so start ticking off your checklist now and let your 40s be the decade of confidence, not compromise.

Till then, share this article with the people you care about.

Stay informed, stay insured.

Take Care