Do Not Make These Financial Mistakes After You Reach Age 50

Money is certainly not the most important thing in life, but it can affect your health, your relationships, and even cloud your moral judgment.  Failure to establish financial boundaries can lead to money trouble at any age. However, once you turn 50 years old, there are some financial mistakes that you should avoid so that you do not become controlled by money.

Credit Card Debt

If you are not already paying your credit cards off monthly, now is the time to set a boundary around credit card spending and create a plan to pay back existing balances. Credit card debt can cost you hundreds or thousands in interest over a lifetime and drive down your credit score. The sooner you can reduce credit card debt, the more money you will save. This can help you meet financial goals like building your emergency fund or saving for retirement.

No Emergency Fund

Unexpected medical emergencies, loss of a job, or expensive car or house repairs can place a strain on personal finances. An emergency fund can help cover these unforeseen expenses without the need to borrow more money through loans or use of credit cards. What’s more, an emergency fund can also help prevent you from tapping into retirement funds when times get tough. Start with enough funds to cover essential expenses for up to three months and work to up to six months of savings to serve you during life’s rough patches.

Taking Care of Others Financially Before Taking Care of Self

To better serve others, you must take care of yourself first. Life insurance is necessary to protect your assets and protect your loved ones. This is especially true at age 50 when your income level and liabilities may be higher than in the previous decade. It’s not too late to purchase life insurance, but do note that life insurance rates tend to rise with age.

Avoid placing your child’s education ahead of your retirement needs. If funds are limited, it is best to focus on your retirement so that you can take advantage of tax-deferred growth. On the flipside, it may be financially possible to work toward both goals simultaneously with some sacrifice. Seek ways to reduce college education costs, consider whether it is possible to defer your retirement, or have your child contribute funds toward college.

Living House Poor

Spending too much of your monthly income on house expenses like property taxes, mortgage payments, insurance, and utilities can make it difficult to achieve other financial goals like saving for retirement, eliminating credit card debt, building an emergency fund, and investing in life insurance. If you already find yourself house poor, raising your income or lowering your expenses is necessary to reverse this trend. Options include refinancing your mortgage to secure a better interest rate, selling your home and downsizing, and reducing or eliminating discretionary spending. It can be hard to enjoy life if your house is not a good fit.

Regardless of your past decisions, it is possible to find financial peace as you age. As such, practice making good financial decisions going forward and plan for your retirement needs.