A few definite steps can help one get out of a financial midlife crisis.
We all know what a mid-life crisis is. It is that stage of life when one is overcome by a sense of being stuck in a rut. It is accompanied by a loss of confidence and often anxiety about the future.
Many are also prone to face a midlife financial crisis. You may suddenly feel that you have not saved enough, that several of your life’s goals have not been met, that your career is not going the way you had planned and that time is not on your side. However, a few definite steps can help one get out of a financial midlife crisis.
Take a very close look at spending
Get a firm control over your spending. If you do not have one, it is very important to get a budget. Track each and every rupee you are spending. Break it down into different categories. This will give you can idea where your hard earned money is going. If you are spending too much under a single category like eating out or entertainment, look at ways to reduce it. Review your budget month after month to track your progress.
Home loans and car loans are secured debt which is also good debt. But if you are paying of credit card debt or high interest personal loans, you need to pay them off immediately. If you have been paying the minimum amount on your credit card dues, you are paying a very high interest rate. Make it a point to pay off your high cost debt first. Any windfall or bonus that you get should first be used to pay off this debt.
Plan for retirement
Even if you do not have much savings, it is never too late to start. Or you may have been saving regularly, but not with any definite plan in mind. The budgeting exercise will help you create a surplus. Even if you are in your 40s there is still more than 15 years to go for your retirement. Consult a financial planner and chalk out a plan for future goals, especially retirement. Regular savings and a disciplined approach towards saving and investments will give you confidence and peace of mind.
Take a re-look at your career
At this stage of life, it is only but natural to feel that your career has reached a plateau. This is a good time to evaluate your career. In order to break the stagnancy,you can try to learn new skills so that you can move to a different or more significant role. For example, a software engineer who is into programming may learn AI or Cloud Computing.
One may also consider a career change, based on upcoming opportunities. Such career needs to be thought out well in advance. It is advisable to look for part-time courses, so that you can juggle work and studies. Otherwise, you have to plan accordingly, because there is an opportunity cost in case you plan to do a full time course.
Feeling stuck in your mid-life as far as finances are concerned is very common. However, one needs to tackle it smartly.