You’re in your 40s or 50s and need to start over financially. Now what?
Maybe you got a divorce. Or the business you’ve invested everything in failed. Maybe you drowned in debt and had to file for bankruptcy.
Working hard for years and then facing unexpected setbacks you didn’t see coming is daunting.
And yes, starting over financially at this point in life can even be depressing. Here is how you can start over financially during midlife.
1. Prioritize your emotional health first
Life can suck sometimes and it’s natural to feel depressed or anxious after a major life change. That’s why you need to prioritize taking care of your emotional well-being so you can begin your path to get back on track.
Focus on what you still have such as your skills, experience and network. If you’re still breathing, you can do something about your current situation. If you need to, seek professional help.
2. Assess your finances
Take a careful look at your income and expenses to identify areas where you can cut costs.
Separate essential expenses from non-essential ones. Explore downsizing your cable package or canceling unused subscriptions.
3. Build an emergency fund
4. Set realistic goals
Be realistic about what you can achieve in the time you have left to work.
Consider your current financial situation, your desired lifestyle, and how much debt you’re comfortable carrying. Define clear and achievable financial goals for the short and long term.
5. Change careers
If you’re not happy in your current career, consider switching to a new field that offers better pay and opportunities.
Your years of experience can be valuable assets in the job market, so don’t be afraid to explore new options.
6. Find a second income stream
Look for ways to supplement your income, such as starting a side hustle, freelancing, or consulting. Use your experience to your advantage and explore opportunities that align with your skills and interests.
With social media platforms getting bigger and the availability of AI tools more prevalent, there are more possibilities now more than ever.
7. Fund your retirement accounts
Take advantage of employer-matched retirement accounts, such as a 401(k) plan, and contribute as much as possible. Many employers provide contribution matching, which is essentially free money.
Also consider opening a Roth IRA and funding it to the maximum allowable contribution.
8. Make wise investments
Be cautious when it comes to investing your money. Avoid the latest meme stocks and meme coins.
Focus instead on long-term growth rather than short-term gains. Invest in diversified and low-cost exchange-traded funds (ETFs) that have consistently grown over time.
For an ultra-safe investment, the one-year U.S. Treasury bond yields around 5% these days.
9. Cultivate Relationships
Life can get lonely, especially after dealing with major setbacks. You’ll need people you can turn to for emotional support and encouragement.
Stay connected with friends and family members. Sometimes just having a conversation with a person you’re close with can make you feel better.
Final Thoughts
At this stage in life, you’ve been through many ups and downs over the years. But you also have the benefit of overcoming the challenges that life has thrown at you. We can’t change the past and dwelling on mistakes won’t make things better.
But if you have the right mindset and a strategy in place, you can start to rebuild your finances again and get your life back on track.
