Every one of us make mistakes with money. We do not save enough or we spend too much on something silly. Sometimes, we sell our shares too soon or too late. It is likely that we would still be making money mistakes well into our 60’s. Here are the financial slip-ups to watch out for at each decade of your life. Avoiding these financial mistakes as you go along can save you a lot of stress and money, both now and in other stages of your life.

In your 20’s

In your 20’s, you are most probably new in the workforce, trying to work your way up. Unfortunately this also translates to a low income but being young, socialising usually takes priority causing you to overspend and under-save.

Overestimating purchasing ability

You could be wanting to travel the world or buy a luxury car, but you do not earn enough to afford these things. If you cannot pay for these wants from your own pocket, you may end up incurring huge debts that hold you back for years. Get used to saving for the things you want instead of solely depending on credit.

Delaying retirement savings

When you are in your 20’s, retirement can seem far away. The earlier you start stashing away savings for this purpose, the more you will earn with compounding interest and the more comfortable your retirement will be. The money you save in your 20’s is potentially worth way more than anything you will set aside in your 40’s.

Abusing credit cards

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While credit cards serve a valuable service by providing convenience, they can also tempt you into living beyond your means. At this stage, your credit card bills can seem burdensome if you are not careful. Failing to settle the full amount, you may resort to paying the minimum balance only, incurring a big sack of accumulated interest. Create a spending plan based on your income and stick to it. Use credit cards only if you can pay the balance off in full at the end of the month.

In your 30’s

In your 30’s, you are most probably married, and started to plan for your family which may involve having kids. More and more financial responsibilities are pouring in, and it will take some finesse and strategy to balance your finances and provide the best for your family.

Not planning for your children’s future education needs

Holding your bundle of joy in your arms, the thought of him or her going to the university may seem light years away. But, time flies faster than you could ever imagine. As the cost of a university education is set to rise as years roll by, you should start planning for your child’s university fund right from the birth of your child. If you have more than one child to fund through university, these costs can rack up quite high. By procrastinating or not having an education fund at all, you may be forced to dip into your retirement fund before your golden years.

Taking insurance lightly

Individuals in their 30’s often neglect to protect themselves with adequate insurance. They often lose out on the chance to buy life insurance at a lower premium and delay the purchase of disability, personal accident or health insurance. Going without sufficient coverage is financially risky. With having dependents such as spouse, children and aging parents, it guarantees a financial safety net for your entire family if something were to happen to you.

In your 40’s

In the 40’s, one would most probably have reached the peak of their career and be earning substantially more than you were in your 20’s (or even your 30’s). However, many are still busy spending money on the things they want right now, such as vacations, bigger cars, or new houses, and delaying their retirement savings.

Not reviewing your investment portfolio

Yes, it is a good thing that you have an active investment portfolio, but as you go through different stages in life, your risk tolerance changes. You may have been willing to take more risks when you were in your 30’s as you still had the ability and time to earn an income. However, as you are nearing retirement, you may want to review your portfolio to allocate more of your assets in more conservative investments. However, moving your investments to a safer avenue too early could also cause you to run short on your nest egg. You need to ensure that your savings can support you well through retirement. Balance is the key!

Ignoring writing a will

Obviously it is hard to imagine being in your death bed when you are still young and active. However, writing a will should be on your must-do list when you are in your 40’s, if not earlier. A will protects your family and your assets if something happens to you. It also ensures that you have an attorney that will make financial and legal decisions on your behalf if you become incapacitated.

In your 50’s

In the 50’s, your children are in university and only a decade more to go before retirement.

Using retirement savings to pay for child’s education

If you have children, it is not wrong to help pay for their tertiary education related expenses, but not at the expense of your retirement savings. Too many parents sacrifice their retirement savings and withdraw from their EPF in favour of their children’s education. Put your retirement needs first and do what you can to save for both, which is why its important to start planning for both as early as possible.

Investing like you are in your 30’s

As you are nearing your retirement you become even more protective of your savings in your 50’s. Considering the fact that you could be living well into your 80’s or 90’s, you require a substantial amount in retirement. Simply preserving capital is not a sustainable financial strategy, the money must be put to work. While investing money in an investment is risky, it is equally risky for if the money is kept under the mattress. So make sure you keep growing your nest egg well into your 50’s and beyond, to combat against inflation and support you financially.

In your 60’s

In the 60’s, you have finally retired, wrinkles set in, and your children have settled and have started their own families. Money becomes extremely important to you now that you no longer have an income stream. The best case scenario would be to enjoy your golden years in relaxation and do things that you were too busy or didn’t get to choose before, when you were still climbing the corporate ladder.

Completely abandoning investments

You tend to build your funds until you retire, and then stop proactively building and start living off those funds. However, retirees can continue to maximise on their investments to stretch their retirement income through investments that offer monthly or quarterly distributions. Ensuring your investments deliver a steady income stream can help you better manage your budget and stretch your money further.

Not maintaining a medical insurance

As you grow older, your medical insurance becomes more and more expensive. Most people would cancel it, and focus their finances in other areas of their lives. However, there is a reason why the cost of medical insurance increase in tandem with your age — people are prone to sickness as they get older and medical bills would start pouring in. That is when it will hit that you should have kept your medical insurance.

Making full use of financial opportunity at every decade of your life is important. More money handled appropriately means more opportunities and more financial security for you and your family.

Written by iMoney Editorial