How to ease midlife money worries

If you’re seriously feeling the pinch in middle age, you’re not alone. People in this age range are more likely than any other age group to say they’re just about getting by or they’re struggling financially, according to research.

Nearly a third (31 per cent) of 45 to 54-year-olds say they’re just getting by with money, while one in eight (12 per cent) is struggling to make ends meet, Hargreaves Lansdown found.

This compares with a quarter of people (24 per cent) across all age groups who say they’re only just about getting by financially, and 8 per cent who are struggling to manage.

With bills, mortgages, superannuation and so much more to think about during this life stage, things really can add up. So, what might help?

Read: Surprising ways retirees can waste their savings

Sarah Coles, personal finance analyst at Hargreaves Lansdown, shares the following money tips for people in midlife.

1. Prioritise emergency savings
There’s always something to spend your money on – and plenty of people keen for you to spend it on them. The best way to build an emergency savings safety net is often to pay yourself first. Have a direct debit going out of your account into your savings on the day you’re paid – before anyone else gets a look-in.

2. Keep an eye on debt
Your income and outgoings may be higher than when you were younger, so it’s easy to run up bigger debts on the assumption you can afford to repay them.

This makes you particularly vulnerable if your circumstances change, so take care to keep debts under control. This means only borrowing when you really have to, when the interest rate is low – and when you can afford repayments even if your circumstances shift.

Read: Six reasons retirees still need good credit

3. Budget for the children to get more expensive before they get cheaper
Teenagers tend to be second only to the under-fives in terms of expense. When they’re at home, costs such as their mobile phone and car could fall to you. If they leave to study, you may well still be in the frame for the lion’s share of their costs.

4. Decide how much support you can offer to older children – and plan for it
It’s easy to assume your job is done when the kids get older and leave home. When they come to you for help in an emergency, it can leave you short. If you’re prepared to step in, have money set aside just in case.

5. Take stock of your superannuation plans
Use a superannuation calculator to see whether you’re on track for the retirement income you need, and identify the steps to hit your goals. Checking your balance now could still give you enough time to do something about any potential shortfall.

Read: Superannuation in your later years

6. Be realistic when setting goals
It’s easy to go overboard when setting a budget in order to save the largest amount in the shortest timeframe. But you need to be realistic about what you can achieve. You may not be able to make a $500 saving every pay cycle, but may easily manage five $100 savings over five pay cycles. Stay positive and know that just by chipping away at debts and slowly regaining control of your finances you are moving in the right direction.

Where to get help with planning, budgeting and managing money
ASIC provides tips and advice on managing money through MoneySmart.

Financial Counselling Australia has a consumer website with tips on juggling household bills and debt. You can call their National Debt Helpline on 1800 007 007 for free, confidential financial counselling.

The Salvation Army Moneycare website also offers a free, confidential financial counselling service.

Services Australia has lots of information about free services to help you manage your money.

Do you worry about money? Do you have any other tips to add to ease the strain? Please share them in the comments section below.

– With PA

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Written by Vicky Shaw