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We don't have a crystal ball but if you tell us your generation, we’ll tell you the mistakes that you've made or are most likely to make. That's right, there are some mistakes that every generation makes.
By the time you reach your 40s you're probably well entrenched in your career and the idea of changing to a new one can seem very scary. But it’s a mistake not to consider this. If you want to change careers you don't necessarily have to start at the bottom. You have good, valuable experience that should help you land an equally good job in a new career.
A second financial mistake made by people in their 40s is about their mortgages. You've probably been paying on your mortgage for so many years that it’s just become automatic. However, you should now start looking at your end goal. Could you do something to payoff your mortgage even faster? Maybe you would like to pay it off before you become an empty nester. If this is the case, you need to determine to increase your monthly payments to achieve that goal.
If you still have credit card debt this is yet another mistake made by people in their 40s. What you want to do at this time of your life is to get rid of your debts as much as possible. There’s no way to know what will happen to you in the next decade. You might lose your job, see your kids go away to college or be hit by big medical bill. To prepare for these emergencies, you need to not have any debt hanging over you.
Finally, people in their 40s often make the mistake of not having a will. We understand that thinking about your own death is not a fun subject. However, you need to have a will. This is the only way you can control what happens to your money and your other assets when you die. A will also makes sure that your loved ones are not left confused as to what they need to do if something were to suddenly happen to you.
Fiftysomethings and their mistakes
Unfortunately, one of the most common and worst mistakes that people in their 50s make is dipping into their savings. You should have a retirement fund that’s fairly impressive by now and it can be tempting to use some of that money, especially if you're facing a financial pressure such as paying for your kids’ education or helping support your aging parents. What's best is to leave your retirement money alone and figure out some other way to deal with any new financial pressures.
It’s also a financial mistake to underestimate what retirement will cost you. Today, the biggest cost most retired people face is healthcare. Whether you like to think about this or not, you have to plan that you might need long-term care in your 80s. This can cost as much as $6000 a month so it's important to understand this and plan accordingly.
Third, it’s a mistake to let your children use you. We understand that you want to help your kids but they do need to develop some financial independence. You could start with small steps such as refusing to pay for their car insurance or taking them off your family cell phone plan. And, of course, they should eventually pay you rent, which can be a great way to encourage them to move out on their own.