Middle age can mean different things to different people. To some it comes with greater stability, to others it could involve shifting careers or getting divorced. You may have to start preparing for retirement while still not feeling ready to leave the workforce.
It is a unique phase of life, and you’re somewhere between youth and old age. Middle age can bring some unique financial challenges with it. How well you are prepared for these can put you on the path towards a secure future or complete downfall.
Here are 7 pitfalls people at this stage of life experience and ways to avoid them.
1. Complicated Home Life
By the time most people hit middle age, they’ve accumulated tons of paperwork, knickknacks and other things they don’t need. You can save money simply by adopting a minimalistic approach to acquiring material things. Simplify your life as much as possible and get rid of any clutter. Make a commitment to buy only what you need in the future.
2. Not Managing Your Debts
If you are in debt, do what you can to pay it off as soon as possible. Review your credit report periodically and put together a plan to tackle any high-interest rate debts first. Take a look at your budget and see which areas you can save money on. For instance, if your budget is tight, it may make more sense to rent an apartment, rather than getting into debt by buying a place.
3. Not Diversifying
As you get older, it’s important to make sure that all your eggs are not in one basket. A better strategy is to have a diverse portfolio of stocks, mutual funds and other appreciating assets like property. This is a less risky way to treat your portfolio and is more likely to give you consistent, satisfactory returns over time.
4. Making Minimum Repayments
Lots of people make the mistake of paying just the minimum amount on their credit card bills every month. However, what this means is that they are left paying off the interest for a much longer period of time. This will lead to a much higher bill and more debt in the long run. Even if it’s tough on you financially, try to pay the entire amount every month.
5. Not Making Your Health A Priority
Medical expenses tend to get higher as you age. Research has shown that 30% of all the money you spend on medical needs will be spent in your final 6 months. Following healthy diet and exercise habits will help keep you fit and bring down your future medical bills.
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6. Spending on An Expensive Home Re-model
Depending on the size and location of your home, re-modeling can be an expensive affair. Even re-doing a few rooms could cost thousands. To make things worse, many homeowners end up using their existing home equity or PAG-IBIG funds to finance these costly home renovations. Your savings can take a real beating from the monthly payments that come with a housing loan.
7. Not Having Life Insurance
Thanks to our modern, fast-paced lives, responsibilities and liabilities are at an all-time high. Because of high levels of stress and other factors, we suffer from more lifestyle-related illnesses than past generations.
By investing in life insurance, you can make sure that you leave your loved ones the financial resources to move on.
Final Thoughts
Getting your financial life in order especially when you’re older can be challenging. Middle age is a phase of life that can make or break your financial future. So, follow the tips mentioned above and avoid making mistakes that have a long-term impact.
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