W
e’ve all heard the saying “with
age comes wisdom”, but this
may not always be true in when
it comes to your finances. As
you move through different life stages, there are
new opportunities--and potential pitfalls--around
every corner.
Financial
Mistakes at
Different
Ages
The 20 Somethings
Not being financially literate.
Many students graduate from high school or col-
lege without knowing the basics of money man-
agement. Learn as much as you can about saving,
budgeting, and investing now so you can benefit
from it for the rest of your life.
Living beyond your means.
It’s tempting to want all the latest and greatest in
gadgets, entertainment, and travel, but if you can’t
pay for most of your wants up front, then you
need to rein in your lifestyle. If you take on too
much debt it can hold you back financially for a
long, long time.
Not saving for retirement.
So you wonder “I’ve got time…what’s the rush?”
Well, if you put that time to work for you and start
saving some of your earnings now, your 67-year-
old self will thank you.
By Daniel T. Newquist,
CFP®, AIF®
The 30 Somethings
Being house poor.
Dan Newquist, CFP®, AIF®,
Principal & Senior Wealth
Advisor with RNP Advisory
Services, Inc., a registered
investment advisor, Morgan
Hill. He can be reached at
408-779-0699 or dnewquist@
RNPadvisory.com. Securities
offered through Foothill
Securities, Inc., member
FINRA/SIPC, an unaffiliated
company.
Whether you’re buying your first home or trading
up, don’t buy a house that you can’t afford, even if
the bank says you can. Build in some wiggle room
for a possible dip in household income that could
result from job change, going back to school, or
leaving the workforce to raise a family.
Not protecting yourself with life
and disability insurance.
What would happen if one day you were unable to
work and earn income? Though the cost and avail-
ability of life insurance depend on several factors
including your health, the younger you are when
you buy insurance, the lower your premiums will
likely be.
Not saving for retirement.
Okay, so your 20s passed by in a blur and retire-
ment wasn’t even on your radar. Now that you’re in
your 30s, it’s critical to start saving for retirement.
Wait much longer, and it can be hard to catch up.
GILROY • MORGAN HILL • SAN MARTIN
The 40 Somethings
Trying to keep up with the Joneses.
Appearances can be deceptive. The nice homes, cars,
vacations, and “stuff ” that others have might make
you wonder if you should be buying these things,
too. But behind the scenes, your neighbors could be
taking on a lot of debt. Take pride in your savings
account instead.
Funding college over retirement.
In your 40s, saving for your children’s college costs
over your own retirement could be a mistake. If
you have limited funds, set aside a portion for col-
lege but earmark the majority for retirement. Then
sit down with your teenager and have a discussion
about academic options that won’t break the bank--
for either of you.
Not having a will or an advance
medical directive.
No one likes to think about death or catastrophic
injury, but these documents can help your loved
ones immensely if something unexpected should
happen to you.
The 50 and 60 Somethings
Co-signing loans for adult children.
Co-signing means you’re on the hook--completely-
-if your child can’t pay, a situation you don’t want to
find yourself in as you’re getting ready to retire.
Raiding your home equity or retirement funds.
It goes without saying that doing so will prolong
your debt and/or reduce your nest egg.
Not quantifying your retirement income.
As you approach retirement, you should know how
much you can expect from Social Security (at age
62, at your full retirement age, and at age 70), pen-
sion income, and your pe rsonal retirement savings.
Not understanding health-care costs in retirement.
Before you turn age 65, review what Medicare does
and doesn’t cover, and how gap insurance policies fit
into the picture.
As you are faced with decisions about your
finances at various stages in your life, be sure to
consult with your financial advisor, especially as
major events (e.g., marriage, divorce, birth of a
child, prolonged illness, and job change) occur.
Meeting consistently with your advisor will help
keep you on track toward your financial goals and
retirement objectives.
SEPTEMBER/OCTOBER 2015
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