Authored by Mike Donghia via The Epoch Times (emphasis ours),

Being able to identify financial traps can help make security in your midlife and beyond a breeze.

When you’re young, the central money problems to solve are how to grow your income and begin to invest so the magic of compounding is on your side.

As you approach retirement, the challenge shifts to managing health care costs and transitioning your investments to a stable phase, allowing you to draw on them.

What about the midlife years when life is busy and the demands on your time are at their all-time high? What is the most innovative way to approach your finances during this season?

As I enter my mid-30s, I am firmly entering the exciting midlife years with a career and a large family to care for. After years of having to closely manage our money, a bit of breathing room has finally emerged. However, I’m convinced the key to this season in life is avoiding the money traps that so easily entangle otherwise intelligent people.

Midlife can last for around three decades—a long time to see your career and investments grow if you’ve set yourself up that way. That much time also means plenty of opportunities to get off track and blow your blessings on trivial mistakes.

7 Common Midlife Money Traps

There are several ways we can fall into financial trappings. Becoming aware of them can help us avoid their ill effects.

1. Allowing Your Spending to Increase With Rising Income

Our default human behavior is to spend nearly everything we make. As your income grows, your expenses grow proportionally, as if by some inexplicable magic. It happens without even thinking about it, but means your rate of savings never increases. The opportunity cost is significant because that money could be invested conservatively and grow over time to meet larger needs that will surely arise down the road.

2. Not Diversifying Your Investments

There comes a season in many people’s lives where they get the idea that they can invest their own money better than the average professional. Generally, people who get the investing itch end up concentrating their investments into what they see as “sure bets” instead of diversifying and accepting normal rates of growth. Sometimes you’ll get lucky and this will work out, but more often you’ll be unlucky and see painful drawdowns. For most non-experts, it’s a trap to avoid.

3. Underestimating the Impact of Inflation

Another type of person views the stock market and other investments as risky and therefore avoids them altogether due to fear. They read about the volatility in the news or hear about friends or family losing money, and want to stay as far away as possible. What they often fail to account for is the slow, draining effect that inflation can have over decades. With just three decades of 2 percent inflation, your original amount is worth about half of what it was at the start. The moral is: Don’t let fear keep your money from earning interest— find a local advisor that can help you make wise investments.

4. Carrying High-Interest Credit Card Debt

Credit card debt is a trap, and possibly the main reason, besides health care expenses, that people end up in bankruptcy. Avoid at all costs. Aim to make it through your entire midlife years without ever paying a dime of credit card interest. For one, if you have a substantial emergency fund, it should never really be needed. If you do need a loan for any reason, there are much cheaper sources that any bank or credit union can point you toward.

5. Falling for Get-Rich-Quick Schemes

We all know the dangers of the midlife crisis and the irrational decisions it can lead people to make. Sometimes we feel “behind” on our financial journey and want to make up for lost time in one fell swoop. When it comes to money, always assume there’s no additional upside without additional risk, and your midlife is not the time to be ratcheting up the risks you’re willing to take. It’s far safer to find a source of side income if you want or need to grow your savings faster.

6. Not Building an Emergency Fund During Good Times

Many of the problems mentioned in the above list can be avoided by making it a priority to build an emergency fund and add to it over time. Having cash on hand, or money that you can quickly and easily convert to cash, is one of the best safety nets you can build for yourself. While many people advocate for three to six months of expenses, I say to aim even higher in your midlife—up to 12 or even 24 months so that you can weather any financial storm.

7. Buying Too Much House or Too Nice a Car

One of the most common traps people fall into when they finally start having some extra dough is looking around and seeing how they stack up to their peers. Not wanting to appear behind, many upgrade their lifestyle with bigger homes and newer, higher-status vehicles. I’m not against spending your well-earned money, but be careful that you’re doing so thoughtfully, and with the bigger picture of your financial goals in mind.