How to Retire by 40: Advice From the Experts

The most common mistake people make when managing their money is not understanding their relationship with money, says Braxton. “Money is a mystery in most families so you don’t understand how financial behaviors affect your decisions – negatively or positively,” she said.

Another common mistake that people make as they begin their careers is to spend too much money, added Haywood. Going from no money while in school to a nice salary tempts people to overspend. “When I started out, I bought my shoes at DSW so I could save,” he said.

To avoid overspending and under-saving, all panelists suggest you first develop a strategic plan for your financial future.

“Define your focus and your philosophy,” suggested Haywood. “Your focus might be to get out of debt or build personal wealth and should include specific target dates,” he explained. “Your philosophy might be that you don’t want to spend more than $300 on something until you’ve thought about it overnight.”

Once you’ve defined your long-term goals along with intermediate goals, look for ways to invest wisely. “Focus on investments that produce cash flow that can supplement other retirement income such as Social Security, pensions, IRAs or 401Ks,” said Bramble. “Real estate is a good way to diversify investments, whether the real estate is your own home or investment properties.”

Don’t be afraid to invest in the market, but be smart and invest in what you know, suggested Haywood. “Look around and see what products people are buying or what services they are using. If it makes sense that these companies will grow, invest in them.”

Employer-sponsored retirement plans are great ways to build wealth so contribute the maximum allowed, or contribute up to the maximum that the employer matches if it is offered. With 401Ks or IRAs, the key is to contribute early.

“If you are 15 years away from retirement and you want to have $1 million in your account, you need to save $2,400 each month,” explained Wilson. “However, if you start saving in your retirement account as you start your career – 45 years to retirement – you only need to save $95 each month to save $1 million.”

The best way to make sure your financial strategy is on track, always ask yourself “What do I want?” recommended Haywood. “If you are not intentional about creating wealth, you will end up accidentally poor.”