People commit a lot of money mistakes at different points in their life and empty nesters are no different. Investopedia.com explains that these empty nesters are parents whose children are no longer with them and with their mortgage payments either paid off or close to being paid in full. These are usually older people who are already retired or close to it.
These are the people who are sending kids to college and making the last few payments on their house or even their car loans. But they need to understand that this is a crucial stage in their life and apart from discussing college expenses with their child, they also need to plan for their future when the time comes that they all set off for college.
It might sound like a dream for most parents when they become empty nesters. Their ids are already out of the house and theoretically, the expenses should go down and they have the house all to themselves. They can begin putting up the decors that they want but can’t because their children seems to break all the fine vases when they are out.
But this stage in their life seems to be a walk in the park but is littered with money mistakes that they might know they are already making. The bigger their financial blunders at this point in their life, the harder it could be to recover because they are already past their prime when it comes to their earning potential.
Most common financial mistakes
Statisticbrain.com shares that the number of Americans that turns 65 every day or the averge retiremeent age is at 6,100. It is safe to assume that the number of empty nesters is close to this number because they are around this demographic. With that in mind, it would be a great idea to identify some of the most common mistakes they make with their finances in hopes of addressing them right away.
- Forgetting the fact that you will be empty nesters in the future. If you are thinking of getting a house, you need to factor in a lot of things including the realization that one day you will be an empty nester. More than just looking at the down payment and the interest rate on the mortgage loan, you need to look at how the market is performing in your area. If you are buying a big property, you need to remember that the time will come you and your husband or wife will be the only ones left. If you choose to give up the place, would you be able to sell the property or are the homes in your area in the market for years?
- Going all out on purchases and renovations. One of the most common money mistakes empty nesters tend to make is that they get carried away with their expenses as soon as their kids leave the door just like home renovations. There are secret weapons in home improvement but one that retired people needs to closely keep an eye out for is spending too much on things they might not need in the long run. That man cave might only be good for a few years and would be hard to maintain in the long run. Improvements should be to have an easier time around the house and not those that would need a lot of maintenance in the future.
- Assuming expenses will go down. It only follows that as soon as the kids head off to college, expenses of empty nesters would go down. After all, utilities expenses would go down like electricity, water and even cable can go down. The budget for grocery would go down as well because there are less people in the house. But empty nesters might be surprised that they seem to be spending more than before. Looking at food for example, instead of buying food to cook, empty nesters might find it more convenient to just eat out. But they
- Choosing to sit on a couch and do nothing. This might be a dream come true for a lot of people as they sit on a couch trying to catch up to their favorite shows. But this will be detrimental to their health in the long run. Keeping their body healthy means eating right and exercising right and that will not happen when people decide to sit on the couch all day. This could even lead to bigger medical bills in the future.
- Believing money will just come. If you are the empty nester, you might want to look at following your hobbies and making a living out of it. It can keep you sharp and focused and more importantly, put in your hands some extra funds in the budget. This is a lot better than just sitting at home waiting for money to land on your hands.
Tips to help finances after the kids are out
It is no secret that finances can be tough when you are left all alone at home. There are ways to save for college education and you might have focused on it too much that you were not able to accumulate enough for your retirement. Here are a few things you can look at to help you deal with finances after the kids leave the house.
- Continue with your frugal lifestyle. USNews.com shares that one beenfit of being a frugal spender is that you are able to better appreciate things. This can help you value the things that are really important to you and not waste money on insignificant purchases. Being frugal can also help you monitor and restrict your purchases to things that are necessary. It will also help you prevent committing money mistakes because you get creative with your spending. Instead of going out to expensive dinners, you pick up the cookbook and learn howp to prepare meals at home.
- Watch your expenses especially when the kids are around. Your children might come and visit you from time to time and you might feel obligated to spend a lot on them so they would come back and stay with you again. You might buy them expensive gifts or bring them out to fancy dinners. It might also be the other way around and you visit your children and spoil them in the process. Be mindful of how you spend your limited funds when your children are around especially that you are relying on that retirement money and nothing else.
- Make sure all your legal documents are in order. This can cover will and testaments to make sure that whatever happens after you pass away, your children does not have to worry about anything. It can prevent fights among your children because if you have something to leave to them, they do not quarrel on who gets what.
Empty nesters can still commit money mistakes and at that point in their life, it might be hard to recover because they are already past their prime. It is best to be on the defensive end and not rely on their children’s help to get through with their finances or their day to day need.