By AJ Smith, Credit.com
Reaching your fifth decade is a milestone, and hopefully you have learned a few things on the way. Here are some of the important financial lessons that are good to learn before turning 40.
1. Keep Your Housing in Check
Since the median age of first-time homebuyers is 31, you've likely already bought a home. If you haven't, now could be a good time to consider whether renting or buying is the right choice for you. One of the most common mistakes first-time homebuyers make is committing to more house than they can afford. It's important to look at your budget realistically and consider all expenses involved in owning a home before you shop for property. (Here's ahome affordability calculator that can help you make the right decision.)
2. Get Insured
Although you may have skated by in the beginning of your adult life counting on your youth and health, it's important to consider insurance -- from disability, health, home and car insurance to life insurance. It's a good idea to evaluate the policies you have to be sure you have the right coverage.
3. Be Cautious With Credit
Whether you had to work hard to dig yourself out of student loan debt or you made a poor choice on an expensive new car, you've likely learned how not fun it is to have to make large monthly payments to get rid of debt. It's important to live within your means and resist the temptation to bankroll your life with credit cards.
4. Plan Ahead
No matter how far off it may seem, getting started on or ramping up your retirement fund now will maximize the time your money has to grow. 401(k)sand IRAs are terms you cannot afford to ignore. It's a good idea to think about what kind of lifestyle you want to have in retirement and make sure you are putting away enough money to get you there.
5. Your Credit Matters
You are probably long past thinking you need to be concerned with credit only if you are about to finance a big purchase (say a home or a car). Keeping tabs on what's in your credit report (and disputing any inaccurate information) is just good credit hygiene. You are entitled to a free annual credit reportfrom each of the three major credit bureaus. You can also see a free credit report snapshot every month on Credit.com. Your credit score is a three-digit number derived from information in your credit reports, and it helps determine the interest rates you'll pay when you borrow money and the types of credit cards and terms you can qualify for. Monitoring your credit score regularly can also alert you to possible fraud if your score changes dramatically, and you don't know why.
6. Emergencies Happen
Your checking and savings account are already accounted for, but by now unexpected things have probably come up and those surprises are almost always expensive. Experts recommend keeping three to six months of living expenses in an emergency fund so you can handle those surprises in the future without going into debt.
7. Budgets Work Only if You Stick to Them
Keeping track of your incoming and outgoing cash flow is imperative to financial success, but making a budget is not the accomplishment. It's important to make sure you are staying within the guidelines you have set or determining the reasons you may not be and how to fix it.
8. Ask Questions
Finally, by your 40th birthday you've realized you don't know it all. It's important to ask for help when you feel overwhelmed or unsure. If you need help on a specific topic, consider consulting a finance expert.
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This article originally appeared on Credit.com.
About the author: AJ Smith is an award-winning journalist with more than a decade of experience in television, radio, newspapers, magazines and online content. She currently serves as the managing editor for SmartAsset. AJ has a passion for meeting new people, sharing stories and helping others. She has degrees from Princeton University and Mississippi State University. AJ and her husband also write and illustrate educational children's books. More by AJ Smith