If you’ve managed to go through life and avoid any sort of mid-or quarter-life crisis — congratulations. That European cruise or fancy new car can wait if you want to be smart about money management.

Here are some money lessons that everyone should know by age 40. Young adults who adopt these lessons early will not be sorry, and late learners still have time to catch up.

1. Know how to budget

The backbone of a sound financial plan is a budget. Budgeting helps you make the most of your money and reach your financial goals.

See our previous blog post on how to best establish a working budget.

2. Understand the importance of an emergency fund

Do you already have an emergency fund? That’s great, you’re steps ahead.

Your emergency fund should be able to cover four to seven months’ worth of expenses in case of emergency.

You should keep the funds in an easily accessible place. NO — not under your mattress or in your underwear drawer. Think about storing the money in a savings account or investment account. These types of accounts offer a return on your money, and you’ll have access to it if an emergency strikes.

Take your time before choosing a savings account, different banks have their own rates set. Shop around and find one that works best for you.

3. Working forever isn’t a retirement plan

When you hit your 40s, you should understand that saving for retirement is a critical part of your financial strategy. This is something you should have been planning in your 20s!! But don’t worry, it’s never too late to start.

The maximum contribution amount for your RRSP is 18% of your taxable income, with a maximum of $26,010, in 2017. You have until March 1, 2018 to contribute.

Check to see if your employer has policies in place to match your contributions!

4. Credit is a tool

At this stage, you’re likely dealing with a mortgage, car loans, and children at different, and expensive, stages of life.

If you examine your credit score and don’t like what you see, chances are you haven’t paid your bills on time. Having a healthy credit score is vitally important.

Committing to paying everything on time is the obvious solution to this problem.

It also pays to check your credit report carefully for credit killers, such as identity theft or inaccurate reports. There are many online services at your disposal.

Finally, at your age, work to pay off debt and keep balances low. Focus on power-paying your debts and getting rid of them as fast as possible.

5. You need insurance

From your health to your home, it’s important to have insurance as a safety blanket in emergencies.

Someone with lots to lose — a home, a car and future income — is better off picking a plan with high deductibles, and planning only to claim when there is a devastating loss that you can’t pay for otherwise. In other words, you collect when the house burns down, or the car is totaled, or the accident causes major injury.

Well, there’s five steps for you! If you require further, more detailed advisory regarding your finances you know who to contact: info@kbh.ca