Financial education from an early age is something we usually take for granted, without analyzing carefully the possible consequences the lack of it at every stage of our lives. The perception of the material changes over time and so each generation faces different mishaps and bad decisions that crawl to the next stage.
The best way to avoid these situations is to learn from them. We will discuss the financial errors in each stage of life:
The millennial generation (those born between 1980 and 2000) is generally seen as financially irresponsible, but studies show that they are actually saving better than their parents.
Their most common errors are:
- Extend the payment of student loans: It is important to liquidate these payments as soon as possible, otherwise the accumulated interest can make them pay a lot more money for years, preventing them from making progress on other aspects.
- Not prepare for retirement: To see retirement as something very far away, not intended for a part of their income to invest it in a savings fund that gives them enough income to live alone in the last years of their lives.
- Overspend with credit cards: Believing that the card gives extra money and that is sufficient to perform the minimum payment, regardless of the high interest rates charged by banks it is one of the most serious mistakes to comment people at this age, derived from the little financial culture and the expectation of having more income in the future. The truth is that it can become a pattern of behavior in other stages.
The most important recommendation for them is resisting purchases by momentum and start to save some of the monthly income for the future, which will not only save, but to invest in order to generate returns.
Adults have grown economically. Expenses and financial responsibilities have increased. These are some of their mistakes:
- Buy a more expensive house than our wallet can bear: It is often think that having a own roof is virtually an obligation and achieve this goal makes getting further into debt, compromising future income.
- Believe that it is too early to prepare a will: Nobody likes to think about death, but it is something that must be addressed. Having a will help clear up any confusion for our loved ones, in case something were to happen.
In adulthood it is advisable to analyze carefully our expenses and design a plan to pay debts that we gain by ensuring that we have enough liquidity.
The old age
In this period of life it is expected to reap the fruits of what was sown in the previous stages. These are the mistakes to avoid ensuring a stable retirement.
- Underestimated the costs of health care: The health care is the most important cost in this stage and it is common to underestimate it. It is important to accept that this reality is possible and plan according to it, because this expense can cost more than $6,000 a month.
- Dip into the retirement fund: At retirement fund of retirement should be quite impressive, and it can be tempting deal with savings to give some taste. This is good, but before it is essential to know what will be the financial pressures of this stage to be able to confront them in the best way.
The best way to avoid trouble for the last years of life is prevented in the early stages.