10 Smart Money Moves to do Before 40
When people think about wealth, they often imagine yachts, private jets, and million-dollar mansions. But for me, wealth means freedom. It means being able to do what I love, spend time with family, and not worry about money. In this article, I’m breaking down the 10 smart money moves you can make to reach financial independence before age 40.
1. Define What Wealth Means to You Wealth isn’t one-size-fits-all. For some, it’s $500,000 in the bank. For others, it’s $20 million in assets. The important thing is to define your personal retirement number. While many use the 4% rule ($1M = $40K/year in spending), I prefer the cash flow method. Own income-generating assets—like real estate or dividend-paying stocks—that pay you every month. If you can get a 7% annual return, you only need about $650,000 to generate $45,500/year.
2. Track Your Income and Expenses If you don’t know where your money is going, you’ll never gain control. Pull up last month’s bank and credit card statements. Categorize everything: rent, food, gas, travel, entertainment. This exercise isn’t just for budgeting—it’s about awareness. Once you know your patterns, you can optimize them.
3. Build a Real Emergency Fund Life happens. You get laid off. Your car dies. Your AC breaks in the middle of summer. That’s why your first financial priority should be an emergency fund covering 3–12 months of living expenses. Keep it in a high-yield savings account. It’s not supposed to grow your money—it’s supposed to protect it.
4. Create an Investing Plan Investing is how you grow wealth, but you need a plan. My favorite split is 75% of income for spending, 15% for investments, and 10% for saving. Set up three separate bank accounts. Automate transfers. Keep your investments simple: ETFs, dividend-paying stocks, or rental properties. Focus on income-generating assets.
5. Pay Off Bad Debt Debt is one of the biggest killers of wealth. Use the snowball method (smallest debt first) or avalanche method (highest interest rate first) to eliminate it. The key is to be consistent. Don’t stop until you’re debt-free, and then redirect those payments toward your investments.
6. Eliminate Dumb Spending Habits By the time you’re 40, you should be saying “no” to financing vacations, luxury cars, or overpriced gadgets. My “rule of five” says: If you can’t afford to buy five of it, you can’t afford one. It forces discipline and long-term thinking.
7. Buy Income-Producing Investments Want to retire early? Start building streams of passive income. Buy stocks that pay dividends. Invest in real estate. Use platforms that let you invest with as little as $100. Don’t wait for a big windfall. Start now, grow slow, and let compounding do the heavy lifting.
8. Get Life Insurance (If Someone Depends on You) If you’re a breadwinner, don’t leave your family exposed. Get term life insurance that covers your family until your investments can take care of them. It’s cheap and gives you peace of mind.
9. Invest in Your Financial Education Read books. Take courses. Watch videos. The more you know, the better decisions you make. Don’t treat learning like a luxury—treat it like your job. Smart investors study before they invest.
10. Plan for Succession and Give Back You’re not building wealth just for yourself. You’re building a legacy. Create a will or trust. Work with professionals to protect your assets and minimize taxes. And when you reach financial freedom, help others do the same. Whether it’s donating to a cause or mentoring someone, giving back is part of real wealth.
Final Thoughts Financial independence before 40 isn’t about being born rich or winning the lottery. It’s about discipline, strategy, and patience. Start tracking. Start saving. Start investing. And remember: the earlier you start, the more time your money has to grow. Let’s get to work.
Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.
