As your life changes, your financial needs change as well, and so do the potential pitfalls you need to avoid. While most of us struggle with becoming financially independent in our 20s, entry-level jobs are plentiful and with no dependents, living costs are surprisingly low. Many young adults still live at home for part or all of this decade, so they have a built-in safety net if things go wrong. Fast forward a few decades and those same adults are faced with a mortgage and increased family responsibilities, and while most of us experience an increase in income over time, expenses and obligations rise as well.
The financial dilemmas you face will change over the years, looking back even a decade in your own life can reveal some surprising differences in both your priorities and responsibilities. Being aware of some of the most common pitfalls experienced by most adults in each decade can help you prepare and protect your assets and financial future.
We’ve assembled a list of some of the most common financial mistakes made by adults in each decade, so you can get an idea of what patterns to watch for in your own life. Your financial outlook, lifestyle, and priorities are unique, but getting an idea of what to look out for can prevent costly errors and make it easy for you to navigate the changes that come with age.
In your 20s, you face financial independence for the first time – and with that independence comes fresh financial peril, too. From becoming overburdened with credit cards and student loans to damaging your credit score (and your chances of buying a home), building good credit and learning to save and spend responsibly is a must for young adults.
Fresh obligations, including a spouse or partner and possibly kids and a mortgage, all take the forefront when you're in your 30s. Your income is rising, but so are your expenses, and if you try to keep up with the neighbors – or invest in too many status items, you could be on your way to financial disaster. While many adults overlook retirement savings in this decade, doing so is a mistake. If you invest now, your money has time to grow into a sizeable nest egg.
You’re earning a great income and at the top of your game at work – but are you wasting money every month just because you haven’t bothered with a budget? Overlooking budgeting can cost you in your 40s, even if you are earning more than ever before. This is also the decade to really buckle down and work on your retirement investments – not having a plan in place by now is the most costly financial pitfall you’ll face this decade.
Obligations vary wildly for people in their 50s and 60s – some of whom are still caring for children (or footing the bill for college) while others are caring for their own aging parents. The sandwich generation faces many financial issues, which can all be summed up as one problem: placing the needs of others before your financial future. While caring for family members is a must, putting your own needs and health on the back burner will cost you in the long run.
We’ll be shining a spotlight on each decade in detail in the days to come - and wrapping things up with some of the most common errors people make when they retire, too. Stop back each day to get fresh insight on what to expect in the years to come - and how to start protecting your financial future today, too.