When you are in the mid-20s, you have just begun earning and life is nothing but spending and feeling the fresh of money and freedom. When in 30s, life becomes more about doubling of joy at the same time with added responsibilities of making and taking care of your family like getting married, having kids and buying that first home, your dream home.
What happens to your life after 40s? Life becomes more of work, more of responsibilities as your goal shifts to making wealth and reaching that financial freedom. You should be ready to make the right financial choices and be on the right path to reach your goals and also realize the dreams of your loved ones. However, this doesn’t always happen that easily.
People tend to make big and small mistakes with their financial choices and that has a greater impact on their life than the mistakes that are made in 20s or 30s. This is because there are more financial requirements to meet, such as maintaining the standard of living of your family, paying off the home loan and any other loans that exists, your kids’ education and their marriage, getting ready for your retirement and. So, now we will see what the common mistakes are that people make in their 40s that should be avoided at all costs.
- Expenses getting out of control
People are at the peak of their career and they get big number income. There is a good chance of cash overflow that makes a person to award themselves with huge expenses such as a bigger house, a new car, extravagant vacations, and a lot of shopping. Always keep an eye on what you are spending on before you go overboard with your expenses.
- Neglecting your emergency fund savings
With such out of control expense lie style, people mostly forget about continuously saving for the emergency fund. Having enough (or more than enough money) in your emergency fund is vital to deal with unexpected expenses and events. As you reach your 40s, make sure to regulate your emergency fund in proportion to your income as this will help to maintain the standard of living of your loved ones.
- Not keeping an eye on mortgages
People don’t seem to care about their home loans or other mortgages that they have as much as they worried about them when they initially started the mortgages. You should see to it that finish off your existing loans including your current home loans by your mid-40s or at least by your late 40s. You should never carry your loans to your retirement.
- Not saving for your kids’ education and marriage
Education is one of the exponentially increasing costs and this education inflation is mostly missed out of calculations. Everyone wants the best for their children. You must be ready to support your children with any of their education dreams. But, with more concentration towards reaching new heights in one’s own career and by being carried away with those big pay checks, people forget to save for their kids’ education needs and also the expenses that they will incur for their children’s marriage. Ensure to automate a specific amount of savings that keeps into account inflation costs for your kids’ higher education and marriage expenses.
- Digging into retirement funds to support children’s higher education and marriage
Another very big mistake that a vast majority of Indian parents do is to put their kids’ education and marriage above their retirement needs. As said before, you should start saving for your children’s education and marriage requirements. The reason that you should never dig into your retirement corpus is if you don’t’ set aside enough money for your retirement then it will become very difficult maintain the standard of living after retirement and also it will not be possible for you and your spouse to have that peaceful old age. Saving for retirement is extremely important as unlike loans that are available to support your kids’ education or even to cover marriage expenses, there are no loans available to help you with your retirement needs. So, if you have not started saving for your retirement yet, then it is high time that you start it in your 40s.
- Investment mistakes
When it comes to investing money to build your wealth, it is always good to seek advice from professionals. With all the big changes happening with their career and the big responsibilities that one has to take care of, most people either end up investing very little or take unwanted huge risks with their investments in the late 40s. It is the right time to start making the right decisions and strike that required balance with your investments portfolio.
- Neglecting your health
The busy life and the commitment towards family and career make most people in their 40s to neglect or ignore their own health. This might become a problem because not only medical expenses are too heavy on the pocket but your health greatly affects the peace and stability of your family and loved ones.
- Not having the right insurance cover
You are your family’s most valuable asset not only as the bread winner of your family but also the most needed moral support. People forget to either get insurance cover at all or they do not make the proper calculations to get the right insurance cover. It is not enough to want your family have that financial support to continue to live life the same even in your absence, but you have to make sure to have a substantial insurance cover to make it a reality.
Avoid making these mistakes in your 40s and 50s and you will sure gift yourself and your family the happiness and financial freedom forever after.