5 Money Moves You Must Make Before Age 40

You’ve probably been hearing it since you took on your first job: Manage your money! Don’t just work for it, make it work for you. Now you’re in your 30s and realizing that you never really got around to it. But it’s not too late.

Consider making these smart money moves in your 30s to set yourself up for financial success later down the line.

Create a Budget … and Stick to It

First, figure out what you have to work with.

Creating a budget begins with identifying what you earn each month. Use your take-home pay instead of your pre-tax income, because this is what you have available to spend and disperse. Now tally up all your must-pay monthly bills as well as your discretionary expenses. Ideally, this number is less than your monthly income.

Assuming you earn more than you spend, you may want to earmark your excess money to go towardsinvesting, paying down debt, or saving.

And if your take-home pay is less than what you need to make your monthly ends meet? Now’s the time to make some adjustments. Determine whether it’s possible to trim down or eliminate some of those monthly bills, or consider taking on a side gig to earn some extra money. Keep monthly tabs on your spending and earnings to make sure your budget remains on target.

Set Up an Emergency Fund

This falls under the “saving” portion of your budget. Financial experts recommend tucking money aside in a separate account to cover extra expenses that come out of the blue, perhaps due to a medical emergency, or an event where some or all of your relied-upon income is disrupted.

Your goal is to accumulate the equivalent of at least three months’ worth living expenses in an account that you can tap into without incurring fees. High-yield savings or money market accounts can be good options. To build up your emergency fund, try automating small payments from your paycheck into your designated account.

“You may need three months of expenses or 12, but having cash set aside ensures that life’s surprises don’t push you into debt,” said Trevor Ausen, a certified financial planner (CFP) at Authentic Life Financial Planning.

Pay Down High-Interest Rate Debt

Interest on credit card debt can add up quickly, so you’ll want to focus on paying off high-interest rate debt first, especially compared to lower interest rate debt like a mortgage or student loans. As of August 2025, the median average credit card interest rate was nearly 24%. Aim to pay off your balance in full and on time every month to avoid interest and late fees.

Paying down your accounts will improve your credit score as well. This can translates to more generous interest rates and terms when you take out debt in the future. It can even earn you a break on homeowners and auto insurance rates.

Daniel Milan, investment advisor representative and managing partner at Cornerstone Financial Services, has another suggestion.

“It’s often prudent to shop around for options to consolidate debt together as one loan. You can often find an option that will have a lower interest rate than the weighted average interest rate,” said Millan. “Shop a handful of different loans with different lenders and terms. Pay down the consolidated loan aggressively.”

Ramp Up Your Retirement Savings

Ideally, you’ve been saving for retirement all along. It’s a little closer now as you’re hitting 40, so you want to be sure you’re saving enough to support your preferred standard of living in retirement. First off, take advantage of your employer’s retirement plan, like a 401(k), especially if they offer a match.

“Commit to increasing your contributions by a predetermined amount annually until you reach the maximum annual allowable contribution amount,” said Milan. “At the very least, try to begin contributing at the amount necessary to receive the maximum company/employer match available to you, as that is ‘free’ money.”

Some employers will contribute this extra “free” money to your plan, matching a percentage of what you contribute after you contribute a certain amount. A “full match” means they’ll contribute a dollar for every dollar you save to the plan, but it can also be a 50% match.

Keep in mind that the IRS limits how much you can contribute to a retirement account annually. The cap is $23,500 in 2025 for 401(k) and 403(b) plans when you’re younger than age 50. It’s $7,000 for IRAs. The figures are adjusted annually to keep pace with inflation. Employer contributions to 401(k) plans aren’t included in this limit.

Don’t Forget Insurance

Insurance policies serve the same purpose as an emergency fund: They’re there for you in a worst-case scenario. You don’t want to overlook the value of adequate coverage.

Life insurance will help provide for your children and spouse if you’re no longer available to do so yourself. Ten times your annual earnings is the recommended policy amount. Benefits aren’t taxed when they’re paid out. Some even provide cash value in the form of tax-deferred interest.

“We advise targeting a life insurance benefit value that’s enough that if something were to happen to you, the principal value of the benefit would be able to generate passive income equal to the income your household would lose without using principal dollars,” said Milan.

Ausen recommends other types of policies as well.

“Review life, disability, health, and homeowners/renters insurance by age 40,” he said. “You should have a plan for the risks that matter most for your situation.”

Disability insurance provides the same relief should you become unable to work while long-term care policies cover the associated expenses if you end up needing long-term care.

The Bottom Line

Life and its goals can change considerably when you reach your 40s. Your priorities may shift and you may start more aggressively planning for the future by putting more towards retirement and looking at insurance policies that kick in if something goes awry.