Many people didn’t grow up with much of financial education. As a result, they have no idea what kind of money milestones they should be hitting at each milestone age: 20, 30, 40, etc. However, that doesn’t mean that those milestones go away. That’s true whether you’re 20, 40, or 60 and older. The purpose of this post is to introduce you to three of the biggest money milestones that the financial experts at Second City Advisors recommend that their clients hit by the time they’re 40-years-old.

1. Create a Budget if you Don’t yet Have One

It probably goes without saying that it’s a good idea to develop a budget long before you turn 40. However, if you haven’t, there is a better time than the present.

Mental Floss points out that you can’t build a solid financial future without having a solid financial foundation. That foundation is your budget. Once you have a budget established, you know how much money you have available to for bills, for food, for long-term investments, like your kids’ college education or retirement, etc.

If you’re in debt, then a budget becomes doubly important. Until you know where your spending has gotten out of control and how much money you have to put toward your debt, debt will always be your reality.

2. Deal With Your Debt

Having debt is like having a hole in the proverbial boat. The more debt you have, the faster the water drains out of the hole in the bottom of the boat. Keeping debt while you try to save for big expenses like retirement is like having a hole in the boat. With enough buckets and hard work, you can keep the water out of the boat, but it does make the process that much harder.

Many of the people who talk with Second City Advisors about their credit card issues do so because they are concerned about getting their debt under control. By the time you turn 40, much of your debt should be under control. (Ideally, it should all be under control.)

3. Create Your Emergency Funds

One of the reasons why people get into debt in the first place is because they have no emergency fund. Depending on who you talk to, the emergency fund can mean a couple of different things. We’ll address both in this section. Basically, you should have a smaller emergency fund for immediate emergencies and a bigger one to help you guard against larger emergencies.

For the smaller emergency fund, put away at least $1,000, though up to $2,000 might be better, depending on your needs. Use the money in this emergency fund when you need to cover an expense, like a broken water heater or car wreck. If you do break into this fund, be sure to replenish each time you do until you have at least $1,000 in it.

For the bigger emergency fund, keep at least three to six months of income in savings. This fund protects you in case of job loss or a long illness. You should have enough money in the bank to cover all of your monthly expenses and then some. The same rule goes for this fund. If you have to use it, replace the money you “borrowed” once your financial situation allows you to do so.

Final Words

Getting control of your finances by the time you’re 40 allows you to live with less financial fear when life’s big mishaps happen. Creating a budget, getting out of debt, and having an emergency fund count as three of the biggest financial milestones you should reach by 40. Taking these steps mean that you’re less likely to fall prey to life’s whims and less likely to buckle when a financial emergency strikes.