Building Wealth in Your 30s, 40s, and Beyond
In this episode of the Women’s Wealth Canada Podcast, host Glory Gray breaks down the key financial strategies for building wealth at every stage of life.
Glory explores the importance of establishing an emergency fund, avoiding high-interest debt, and developing smart savings habits. She shares actionable tips for setting financial goals in your 30s, balancing retirement and education savings in your 40s, and preparing for a secure retirement in your 50s and beyond.
Packed with practical insights, this episode will help you take control of your financial future with confidence. Tune in for expert advice and real-life strategies to build lasting wealth, no matter where you are on your financial journey.
Table of Contents
Prefer to Listen?Here’s the podcast episode!
Building Wealth in Your 30s, 40s, and Beyond
Laying the Foundation – The Importance of an Emergency Fund
Why You Need an Emergency Fund
Regardless of your age, start by first building an emergency fund. Having an emergency fund is your foundation because it is going to help keep you from getting into trouble taking on too much debt, particularly credit card debt. An emergency fund can provide a financial cushion if you lose your job or need to take time off. It can also help you avoid the need to sell investments in a down market if you suddenly need cash.
How to Build Your Emergency Fund
A general rule is to keep three to six months’ worth of living expenses in a safe, flexible account, such as a high-interest savings account. I don’t recommend you keep it in chequing. In fact, I recommend you keep your emergency savings in a separate financial institution than your chequing account. That’s because we look at the balance of our chequing accounts often, and seeing your savings account there all the time might make you tempted to spend it. You can either start it at another bank or an online bank such as EQ Bank or Tangerine. One that makes it easy to transfer if needed but doesn’t live there where it can too easily be used.
Automating Your Savings
How should you start building an emergency savings account if you don’t have one? First, open that new bank or online savings account. Then, be honest with yourself. Let’s say you normally earn $20 per hour. Can you take the earnings you earned in one hour a month and put it towards your financial future? Talk about self-care! You can give the bank where your savings account is held permission to automatically take $20 a month from your chequing account and put it into your savings account. You won’t even have to think about it. I promise, you won’t even notice it. Then, one day you’ll realize, hey, I have thousands of dollars in that account and it equals the amount I need to run my household, my household expenses for three months! Then, guess what? You can stop saving that $20 per month and move on to other goals! Not only have you solved a problem and achieved a goal, but you’ve also started your first good financial habit. What a great achievement!
The Credit Card Trap – Avoiding High-Interest Debt
The Dangers of Credit Card Debt
The second important point I want to mention regardless of your age is that you should try your best to never keep a balance on a credit card. You can use a credit card and pay the balance completely off each month but do not keep a balance on a credit card. Credit card debt, meaning carrying a balance on your credit cards and not paying it completely down every month, is the one thing that will keep you from accomplishing your goals no matter what your age. Credit cards charge typically 19-22%. It takes years to pay off that debt if you’re not careful.
How to Pay Off Existing Credit Card Debt
If you are already holding a lot of credit card debt and want some help paying it down faster, check out our podcast episode called “Five Ways to Recharge your Financial Goals.”
Financial Planning in Your 30s
Setting Financial Goals
This is probably the time when you first start thinking about making some financial goals for yourself. You might have some student debt to still pay off and you’re probably saving for some big goals. That could be saving for a home or maybe you plan on living abroad for a while and want to have money put away for travel. You could be building your emergency fund or paying for lots of school and sports expenses for your kids.
Managing Household Expenses
Wherever you are at this point, the most important items to tackle first are: making sure you’re not holding any credit card debt balances, building an emergency fund and creating a monthly household spending plan where you are in charge of every dollar that goes in and out of your household. If you have a spouse, you both should be involved in choosing how money is spent for the household.
If you and your partner choose to keep your personal finances separate, you can, but I would suggest that major household expenses, like rent, mortgages, insurance and utilities, be paid out of a joint account because if something suddenly happens to one of you, it’s going to be difficult to pay your bills to keep your household running.
Smart Saving Strategies
Once those three goals of having no credit card debt, having an emergency savings account and a spending plan going forward are completed, you can start your plans for saving for a home and saving for your retirement.
Any savings goal can be done just like you did with your emergency fund. Decide how much you want to save towards that goal each month, set up an automatic deposit and forget it.
And, I want to emphasize this….if you lose your job in the future, or something else happens that makes those savings deposits become impossible to set aside, you can always pause them and start them up again once the crisis has passed.
I think the process of building the habit of saving in your monthly routine is more important than the amount you’re saving. Especially in your 30’s.
Knowing that saving, that is, paying yourself, is just another bill you will pay throughout your earning years is much smarter and easier than putting off building that habit until your later years. Think of it as just a habit, like brushing your teeth. It will save you from emotional turmoil throughout your life if you think of it that way.
Double Your Retirement Savings With This Easy Tip
Since you’ll be at the start of your career, ask your employer if there are any pension plans or Group RRSPs you can contribute to. The best ones are matching plans. For example, if you deposit $100 into your pension plan, your company will deposit $100 into your pension also. That allows you to double your money, building your retirement even faster.
If you want to start saving up to buy a home, you can open up a First Home Savings Account or use a Tax Free Savings Account. We could spend a whole episode on those accounts alone, just know that they are available and either one can be a good way to save for your first home.
Be Patient
Don’t compare your financial circumstances to influencers or others. Their situation in life could be completely different than yours. It’s good to have mentors, or people who have had success, but don’t be too hard on yourself. Educate yourself, develop good habits, do your best and celebrate your successes.
Financial Strategies for Your 40s
Balancing Retirement and Education Savings
If you haven’t had a chance to build the foundation I just described for people in their 30s, start with that.
A big expense for people in their 40s is often covering the cost of an education for their children. Consider Registered Education Savings Plans for this. The advantage of these accounts is that the government will deposit grant money into the accounts when you make deposits, based on certain criteria.
Having worked with so many families over the years who are experiencing different stages of their lives, I will say this: The greatest gift you can give your children is for you to be self-sufficient in retirement so that they are free to live their lives as they would like to.
Self-sufficiency for you may mean different things for different families. For some families it may mean buying a multi-generational home together. For others it may mean you live in a completely different area of the country or world, independently from them.
In any case, saving for your own retirement years takes on more importance starting in your 40s. If you can, boost the amount of automatic savings deposits you are making into your retirement accounts during this time so you have less stress later on.
Increasing Your Savings Potential
Since it can be difficult to save for both your children’s education and your retirement at the same time, concentrate on finding ways to increase your income so you can save for both. Can you take on a side hustle? Can you ask for a raise? If you have a hard time asking for a raise, find someone who can provide some coaching, someone who has had success at asking for raises.
When you’re in your 40s, you likely have a lot of people depending on you and you probably still have a mortgage. Make sure that you have proper life insurance in place so that your family isn’t forced to move or cancel their own future if you were to pass away unexpectedly. Consider also what you would do if you were hurt and couldn’t work your normal job. Disability Income insurance might be one solution.
Preparing for Retirement in Your 50s and Beyond
Your Most Important Asset is YOU
I’m running into more and more people who are enjoying their careers well into their 70s, so age isn’t so much a factor in our discussion here. The point is preparing for a time when you will be living off of your investments, your pensions and your government benefits rather than having an income coming in from earning a living.
The most important thing to plan for first is finding a way to be in the best mental and physical health you can be when you are no longer working. Think about what really makes you happy so you can put yourself in that environment when you stop working or are working less. How can you keep yourself in top notch physical health based on your own health and body when you’re living off of your investments instead of working?
Creating a Withdrawal Strategy
Then, work on the spending plan you’ll be using in retirement. It will be different from the one you have now. Once you know how much you need to spend every month after you stop working and you figure out how much income you’ll receive from pensions and the government, it’s time to figure out how much you’ll need to save to make up the difference. A financial planner is very helpful here.
Up till this point in your life, your investments have been designed to provide you with long-term growth. In your 50s, the time is coming when you will need to withdraw some of those investments. For more information on things to consider as you prepare for retirement, see our blog post on Retirement Investment Accounts for my waterfall theory of withdrawing income for your retirement.
Once you’ve figured out how much of your investments need to be withdrawn to provide an income for yourself, work with a financial planner to determine if you have enough saved or if you need to save more faster to make up the difference.
Get Your Estate in Order
If you haven’t already, make sure you have a will, a power of attorney and a medical representation agreement in place. The will helps your family after you’ve gone. The power of attorney and medical representation agreements help you during your lifetime. Those two documents can be prepared in advance and can be made so that they only come into use when you need them, such as if you've become incapacitated. They don’t have to immediately come into play.
The Power of Good Financial Habits
Developing a Long-Term Mindset
The beauty of good financial habits is that they will serve you well throughout your life, just like healthy habits do. The hardest part is always starting. But once you start one habit, say, saving $20 per month and putting it into an emergency fund, it leads to other good financial habits. Before you know it, you’re someone who is in control of their financial life. And that feels so good. I want that for you.
If you need some help on your financial journey, particularly if you’re someone in your 50s and beyond and need a financial planner to help you with this next phase of life, our office is accepting new clients this year. So, if you live in Canada and want to get serious about getting your financial house in order, go to GloryGray.com and get in touch with me.
Resources in This Post
You Will Also Love …
