Turning 40 can feel like a wake-up call — and for many, it shines a big, bright spotlight on their finances. Whether you’re already there or approaching it soon, your 40s are a crucial time to assess where you stand financially.
The good news? It’s never too late to improve your money situation and grow your net worth. Let’s break it down in simple terms.
How Much Should You Have Saved by Age 40?
There’s no one-size-fits-all answer, but financial experts often recommend having about three times your annual salary saved by the time you hit 40. This gives you a solid base to build on for retirement and future goals.
Here’s a quick look at what that might look like:
If you earn ₹10 lakh a year → Aim for ₹30 lakh in savings.
If you earn ₹20 lakh a year → Aim for ₹60 lakh in savings.
Of course, life isn’t always that simple. Some of us live in high-cost cities, support aging parents, or raise children. And some may have had help from family. The key is not to compare your journey with others — but to have a goal that suits your lifestyle.
What is Net Worth — And Why Should You Care?
Your net worth is the difference between what you own and what you owe. It’s like a personal balance sheet that shows how financially healthy you are.
Here’s how to calculate it:
Add up your assets:
Savings and current accounts
Fixed deposits and recurring deposits
Stock market investments
Retirement funds (like EPF, PPF, NPS)
Market value of your home and vehicles
Life insurance with cash value
Now subtract your liabilities:
Home loans
Credit card debt
Car or bike loans
Education loans
Personal or business loans
Formula: Total Assets – Total Liabilities = Net Worth
Even if you haven’t reached your savings goal yet, knowing your net worth helps you understand where you stand today and how to move forward.
Should You Count Your Home in Net Worth?
Yes, you can include your primary home — as long as you’re realistic about its current market value. But remember, your house isn’t cash. You can’t easily spend it unless you sell or rent it. So while it’s an important part of your financial picture, you still need other income sources for retirement.
That’s where investments like mutual funds, stocks, and retirement accounts come in. These are the things that will generate income when you stop working.
Ways to Grow Your Net Worth Faster
You may not be able to change the past, but you can definitely shape your financial future. Here are some simple ways to start growing your net worth:
Pay off high-interest debt: Credit cards and car loans with high interest rates can eat away at your savings. Make it a priority to clear them.
Increase your income: This could mean switching jobs, freelancing, or starting a side hustle. More income means more room to save and invest.
Cut unnecessary expenses: Review your monthly spending. Even saving ₹10,000 a month adds up to ₹1.2 lakh a year — money that can grow if invested.
Invest consistently: Treat investments like a fixed bill. Automate your SIPs or retirement contributions. Over time, even small investments compound into big gains.
Example: One person shared that they invest ₹85,000 every month into their retirement and mutual funds. Because it’s automatic, it happens without stress or second thoughts.
Reaching 40 doesn’t mean you need to have it all figured out — but it is the perfect time to get serious about your finances. Whether you’re ahead or behind, what matters most is knowing where you stand and taking steps to improve.
