It’s easy to think, “I should know this by now,” but even the most successful of individuals can overlook important areas of money management. There’s no judgement here – just some recommendations! 

It’s not unusual for financial planning to slip down the to-do list as we prioritise the kids, work and other commitments. But over time, small oversights can lead to bigger issues later.

In your 40s, you’re likely in a good position to take stock of your financial position. These 9 common mistakes lay the foundations for a lifetime of financial security.  

Ready to take hold of your financial future? Book a call with NH Wealth, your trusted financial adviser in Sevenoaks, for a no-strings chat.  

1. Being cash rich 

   Cash is not always king! Holding too much in cash might feel reassuring, but over time, inflation erodes its value, meaning your money could lose purchasing power. Once you’ve set aside an emergency fund, consider investing a portion of your wealth in the stock market (providing you have a medium to long-term investment horizon). Gaining exposure to some of the world’s leading companies offers the potential for your money to grow and helps counter the effects of inflation. As always, it’s important to carefully consider the level of investment risk that’s appropriate for your personal circumstances. 

2. Jumping on investment fads 

   It’s easy to get caught up in a TikTok buzz around NFTs, or follow a crypto influencer on Linkedin sharing their latest hot tip. But chasing investment fads often resembles gambling more than investing, especially when there’s no clear strategy in place. Most people don’t have the time or inclination to monitor markets constantly, nor should they need to. When your investments are well-diversified and aligned with your long-term goals and risk profile, they can be left to do their job quietly in the background.  

   
   

3. Not using ISA and pension allowances

   This is a big one. Each year, you get tax-free allowances for ISAs and pensions. Missing out year after year means losing the chance to grow your money in a tax-efficient way. Over time, that can make a massive difference. It’s worth setting up automatic monthly contributions if you haven’t done so already.  

   
   

4. Delaying your Will or Power of Attorney

   Most people don’t like to think about worst-case scenarios. But failing to have a valid and up-to-date Will or Lasting Power of Attorney (LPA) in place can create serious issues for your family. A Will ensures your money and assets go to the right people. An LPA makes sure someone you trust can step in and manage your finances or make decisions on your behalf if you become unable to.   

   
   

5. Being underinsured

   This is more common than you’d think. Many professionals have little or no income protection in place, and life cover is often just whatever is provided by their employer, which might not go far enough and typically ends when you change jobs or retire. Starting an individual policy early can make a big difference. Not only are premiums generally lower, but you’re also likely to benefit from broader coverage of medical conditions. It’s worth considering what financial support your family would need if something were to happen to you. 

6. Losing track of old pensions

   If you’ve worked for multiple companies over the years, there’s a good chance you’ve got pensions scattered across different schemes. These older plans might be invested in a way that no longer suits you, or they could be charging high fees without you realising. Taking time to review, and potentially consolidate, can help you save on costs and make it easier to keep your retirement plans on track.  

   
   

7. Spending more than you save

   It’s easy for spending to rise quietly alongside your income, especially with holidays, inflation, and family life in full swing. But if you’re not putting enough aside for the future, you’re effectively borrowing from your later life. Having a clear savings strategy, and understanding what you actually need to save, can help keep things in balance.  

   
   

8. Not reviewing your plans regularly

   Your financial plan shouldn't sit in a drawer gathering dust. Life changes with job promotions, moving house, inheritance, or even a change in health. It’s worth checking in on your plan at least once a year to make sure everything still makes sense and is aligned with your goals.  

   
   

9. Relying heavily on property for retirement

   Everyone loves bricks and mortar, right? Property is often seen as a solid investment, and for many it plays an important part in their wealth. But it’s not always as flexible or tax-efficient as people think, especially when it comes to drawing income in retirement. A more balanced approach, with a mix of pensions, ISAs, and other investments, often works better over the long run. 

What can we take from this list of 9 Financial Planning Mistakes to Avoid in Your 40s? 

Your 40s can be a pivotal time in shaping your long-term financial security. Avoiding these common mistakes, from underusing tax allowances to relying too heavily on property, can make a meaningful difference to your future.  

The good news? It’s never too late to take control, especially as they say, “Life Begins at 40”. With the right guidance and a clear strategy, you can build a resilient financial plan that supports your goals and protects your family.  

If you’d like a second opinion on where you stand, or help getting started, book a no-obligation call with NH Wealth, your trusted financial adviser in Sevenoaks. 

Risk warnings: 

• This guide is for information purposes and does not constitute financial advice, which should be based on your individual circumstances. 

• Cover will cease on insurance products if premium payments are not maintained. 

• Generally, these plans have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse. 

• The Financial Conduct Authority (FCA) does not regulate direct investments into crypto-assets or NFT’s. There are no consumer protections (including FSCS protection) for those who buy crypto-assets or NFTs. If you buy crypto-assets or NFTs you should be prepared to lose all the money you invest. 

• The Financial Conduct Authority does not regulate Cashflow Planning.

• The favourable tax treatment of ISAs may be subject to changes in legislation in the future.

• Please note that the Financial Conduct Authority (FCA) does not regulate some aspects of tax planning or trust advice.

• The value of pensions and any income from them can fall as well as rise. You may not get back the full amount invested.