9 money mistakes to avoid in your 40s

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Your 20s were all about setting up your financial foundation and establishing good habits. Your 30s were about life changes like getting married, having kids, and building your career.

In your 40s, everything is amplified even more. You've got growing kids and aging parents — and what you don't have is a ton of spare time.

There's a lot you can do in your 40s to protect your money and care for your family before you begin thinking about retirement in your 50s or 60s. Here's what you should avoid:

1. Buying more house than you can afford

With your growing family, that starter home in a bad school district isn't meeting your family's needs anymore. Suddenly, you want more space for your kids to run around, and you want them to grow up in a neighborhood with lots of friends their age.

It's tempting to opt for more square footage, a larger yard, and an upscale neighborhood. But this means a bigger home loan, increased maintenance costs, and high property taxes.

After spending the first two decades of adulthood in rental apartments or condos (possibly with roommates!), it's natural to want a big, beautiful home to hopefully live in for the rest of your life. But beware of buying more home than you can handle. Houses aren't great investments, so you should be realistic about your budget and avoid tying up all your savings in your home.

2. Not having the right mortgage

Mortgage rates remain quite low (often under 4%, depending on your credit score, loan terms, and other factors). Consider refinancing if you intend to remain in your home for at least a few more years.

I'm a fan of refinancing to a 15-year mortgage. While a 30-year mortgage offers a lower monthly payment, it means you'll have a mortgage well into your 60s or 70s, which isn't helpful in retirement. Plus, you'll pay a lot more in interest.

How much more? Let's say you have a $250,000 loan. You can get a 15-year mortgage with a 3.14% interest rate and a monthly payment of $1,743. A 30-year mortgage would have a 3.81% rate and a $1,166 monthly payment. Spending nearly $600 less per month is appealing, but you'll actually spend $106,073 more on interest payments over the life of the 30-year loan!

As your cash flow situation changes, make sure you have the right mortgage for you. You can compare 15- and 30-year mortgages side by side using this calculator.

3. Overspending on your kids

A big way to keep up with the Joneses in your 40s is to pour your resources into your kids: tutors, travel sports teams, competitive dance troupes, private school tuition, summer camp … the list is endless!

It hard to say no to everything your kids' hearts desire and you really do want to provide those things — not just because you love your kids, but because their friends' parents are your friends and neighbors, and there's pressure for you to fit in.

This is a good time to reassess your money values and teach your kids about creating their own value system. That way, the whole family is spending money and time on what really matters to each of you, instead of what your neighbors are doing.