This month, I celebrate my 41st birthday. I feel fortunate to have made another trip around the sun, even if this one was piloted mostly from home wearing pajamas.
With so much financial advice catering to young adults and retirees, the 40-somethings, I'm told, can sometimes feel like a forgotten generation. Maybe it's assumed we've figured all the money stuff out? We're less likely to be grappling with as much student loan debt as a 25-year-old and not yet navigating through the maze of Medicare. But our 40s are prime time for focusing on our financial health, by righting some wrongs made in the earlier years and capitalizing on what can be peak earning years.
My financial hope for my 40s is to build on the momentum I've worked to create since landing my first job in New York earning $18 an hour and grappling with $30,000 of debt. To that end, here are some of the money moves I'm making.
Know your worth — and add 50%. Twelve years ago, I got laid off from a correspondent role at a financial media company. That summer I launched my business and said goodbye to the conventional days of receiving a steady paycheck and access to a 401(k). What can I say? I'm an Aquarius.
From then on, every job opportunity — from giving speeches to hosting a TV show to writing a book — was a negotiation. And orchestrating my own revenue streams provided early lessons on measuring the value of my work.
What I learned — and what I'll be practicing with more conviction in my 40s — is this: Always ask for (way) more than you think you're worth.
Occasionally, I will receive a job offer that asks me for my "day rate" to say, host an event or film a video series. It's another way of asking me what my time is worth. Or, I may get asked about the "market rate" for my work.
Some older mentors advised me early on that the fact you're being asked to do a job says quite a bit about your "worth." Yes, there is a going "rate" for the mechanics of the work and the market does dictate value to an extent. But your unique skills, reputation and track record are the value add, making the final product or service you're providing all the more desirable and competitive.
My advice: Know your day rate or market rate and tack on 20, 30 or 50%. By 40, assuming you've been climbing in your profession for 15 or more years, you're worth it.
Ramp up retirement. Turning 40 means more time playing with retirement calculators. At this stage, I find it helpful to not lose sight of retirement, which once seemed so far away. Now, I'm nearly halfway there. Maxing out my Simplified Employee Pension (SEP) IRA is not just a nice thing to do — it's quite necessary if I'm to reach my savings goals or, at least, the ones the calculators say I should be hitting. One popular rule of thumb is to have roughly three times your current salary saved by 40 years old.
I could hold off for a few years, until my kids are in school full-time and I'm no longer spending as much on childcare. But I'm not going to wait to contribute more to retirement. Having maxed out all my tax-deferred savings options, I've begun investing more in a brokerage account to supplement savings.
Invest in alternatives. Beginning in my late 30s, I began making alternative investments in some art pieces, as well as in start-up companies. My holdings are not a big part of my net worth by any stretch, and I'm completely aware of the huge risks, but I find supporting artists and founders to be very fulfilling. And I want my 40s to be defined by doing more of what I want and enjoy, rather than what's always "practical."
Another worthwhile investment I'm making is in ... myself. In my late 30s, I took a stand-up comedy class and it led me to perform on-stage at the famed Caroline's and Gotham Comedy clubs in New York City. The writing from that inspired the book I'm currently working on — a passion project that I never would have anticipated. And I'm not even that funny. For me, the enjoyment is in the humility of the performance — when you tell a joke and it doesn't land. It only makes me want to keep at it.
My friend Karen Rinaldi, author of It's Great to Suck at Something, would say I'm on the money. She took up surfing in her 40s and despite many falls has stuck with it. That's the point. "It took me five years to even catch a wave," she told me. "But what kept me going back was … I thought, 'This is the one thing in my life...that I don't have to be good at.' There was so much freedom in that."
Pretend my 30-year mortgage ends in 20. I took on a 30-year mortgage soon after my 40th birthday. Since I'm not a fan of having housing payments well into my 60s, I'm taking steps to accelerate paying it off starting now.
Of course, I don't advocate for prioritizing your mortgage above other financial interests, like saving for retirement or a child's college fund. I'd generally even put springing for a nice vacation or investing higher on the list. Especially in today's ultra-low interest rate environment (the fixed rate on our home loan is just 3%, compared to nearly 5% on our last home), I'm confident my money will be better served growing in the stock market over the same 30-year period. For context, the S&P 500 has grown an inflation-adjusted average of 8% annually since 1991.
But assuming I'm fortunate enough to cover my bases and have money left over, I'm going to make an extra payment or two toward the principal each year. It can go a long way in not just helping me becoming debt-free sooner, but saving me tens, possibly hundreds, of thousands of dollars worth of interest.
Farnoosh Torabi is a financial journalist, author and host of the "So Money" podcast.
Disclaimer: This article first appeared on bloomberg.com and is published by special syndication arrangement.