There is no specific age to fall into financial folly. With every new monetary milestone, financial goal and responsibility comes a whole new perspective of how you manage your finances or mess it all up. If you find yourself guilty of a spoiled personal financial viewpoint, you are not alone in this matter. In fact, every generation reveals many significant mishaps, poor choices, and financial mistakes that its members often make. The smartest way to avoid making or repeating such blunders is to recognize and understand such issues before its too late. Keeping that in mind, here are five of the most common money mistakes that each generation seems to make.
1. Individuals in Their 20’s – Must Overcome the Fear of Investment
Young individuals need to invest significantly into growth stocks. Though they accompany some risk, they offer the immense potential for greater returns over time. Sadly, too many people in their 20’s are too afraid to take risks or are extreme risk-haters that avoid investing. Rather, their portfolios are inclining heavily on their assets and very little on stocks.
According to experts, one of the financial mistakes of risk aversion stems from financial illiteracy and a terrible generational fear of failure. In addition, they believe today’s young generation is more skittish as a result of unpredictable events they have witnessed in their lifetime such as the financial meltdown and the 9-11 attack. To date, mutual funds are one of the most practical ways to ease the angst about investments as they begin with riskier growth assets and, over time, slowly transition to more conservative holdings.
2. Individuals in Their 30’s – Too Much Expectation and Information
Today, more and more Americans are waiting until their 30’s to begin a family or purchase a house, marking this age as a chaotic time. Although these young adults most often think that they must be living the way their elders did, it takes considerable time to build and maintain that level of financial status and comfort. Attempting to live that ideal lifestyle by shrinking credit card debt and purchasing a big house will eventually make it more difficult to fulfill their long-term financial goals.
Making poor investments is one of the most common financial mistakes that today’s 30’s generation makes due to lack of financial knowledge of the several potential opportunities and available options. Young investors lacking the willingness or time to educate themselves might consider approaching financial professionals and bookkeeping experts for smart decision making.
3. Individuals in Their 40’s – Baring Family Expenses All Alone
The 40’s is the midlife period that brings the toughest expenses of all – raising kids, buying homes, maintaining a family, baring their children’s education expenses and possibly even caring for an aging parent. Such burdens have to be managed proactively to prevent both short and long-term difficulties. Baring all of the financial burden alone is one of the biggest financial mistakes that the 40’s generation makes today. Rather, they must encourage sharing the financial burden among other family members and encourage their children to be financially independent by working a part-time job or applying for scholarships. Also, they should start living within their means and build an emergency fund as soon as possible.
4. Individuals in Their 50’s – Trying To Catch Up
Too many people reach their fifties and realize that they have nothing saved for their retirement. Such financial mistakes can be avoided if individuals start saving for their retirement far earlier in life. With the hope of building a business to support their retirement years, an increasing number of Baby Boomers in their 50’s are turning towards entrepreneurship. However, it can render a risky proposition with both immensely significant upsides and downsides.
Although retirement feels hard and uncomfortable when one has to prioritize saving, work a side job for necessary income, and/or downsize a home and lifestyle, it defeats the fear of an under-funded retirement.
5. Individuals in Their 60’s and Beyond – Fail to Ask For Help
According to financial experts, today’s older Americans are comparatively less mature than elderly citizens of older generations. However, age inescapably lowers the brain’s analytic abilities thus making it hard to avoid financial mistakes. Hence, it is imperative for every person to have people they can rely on for financial assistance and decision making matters in their late years. These people could be your family members, friends, financial advisers or a mix of all of these.
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