The 20s are the second decade of life and the transition from being teens is still fresh. In this period of one’s life, we tend to carry the exuberance of the teenage year forward into our 20’s and take certain things for granted.
Especially as it concerns money, unfortunately, it is in one’s 30s that life reveals more of its irreversible realities. The one thing young adults take for granted is money management and if not considered can make you broke for most of your adult life.
Most times being broke throughout one’s adult life didn’t just start as a result of losing a job or having no opportunities to make money, they arise from many errors made with money.
On this article, we will be sharing 14 money mistakes common with young adults in their 20’s:
1. SPENDING TO MAKE THEMSELVES HAPPY
Many young adults derive joy in spending money to make themselves happy, they feel good about themselves when they spend on others too, it is bad to have a mixed feeling with money it can put you in a dangerous situation.
If you’re having a really bad day it’s not advisable to go shopping or spend money frivolously. The temporary fix from emotional spending passes quickly, but saving money will help you structure your finances.
2. BEING UNDER PRESSURE
Being under pressure to spend money on friends and family and not considering where it hurts you financially can lead to a dead end. The moment people discover you have been received your salary or got some cash to spare, they will come for their share.
If you’re not financially disciplined you will end up sharing till you are left with nothing. If you keep being pressured to spend more and you keep spending without a laid back financial plan you will certainly go broke.
A lack of financial budget is like setting your money on fire. Plan your money, create a budget, dedicate a certain percentage to either savings or investments.
3. BUYING THINGS ON IMPULSE
Buying things you don’t necessarily need on impulse is another big mistake young adults make. It’s important to treat yourself once in a while but its also important to resist the temptation if your expenses are getting out of hand.
Before you pay for that expensive product, give yourself a 48hrs to think through the following;
Do I need this?
Can I afford it?
Why do I want this?
If you can answer these questions after 48hrs of thoughts, then you go ahead and purchase it.
4. CAREFREE SPENDING
Many young adults spend more on things because they are guaranteed a salary that comes in by the end of the month or perhaps daily.
This motivates carefree spending and buying unnecessary things without having any financial plans especially when there are friends and colleagues to impress.
It is important to stay within your earnings so you don’t run into debts. If you want to build wealth, you have to watch your spending habits. Carefree spending will only lead to a bad financial crisis.
5. NO SAVINGS FOR EMERGENCY
As a young adult, having a special account for emergencies is another aspect of savings. Having enough money in the bank to pay for things you need like food, drinks and clothing can make you feel good.
However, it’s important to have an emergency fund reserved for unforeseen circumstances because uncertain things are bound to happen. If you think you have a better future than your peers you will be disciplined to save.
6. CHOOSING MONEY OVER OPPORTUNITIES FOR GROWTH
Many young adults will choose a job offer with a good salary over a job that offers more opportunities for growth and learning. Choosing growth over good pay especially if you just graduated will help you gain more experience although it’s not an easy task.
These learning opportunities give you a chance for promotion and are invaluable and chances are that you will end up with a much better wage than the first job after a short time.
7. IGNORING EMPLOYMENT BENEFITS
Many young adults don’t care about the employment benefits of their job especially when it has to do with saving part of their salary for health care emergencies or retirements.
8. FAILING TO PLAN
It is said that failing to plan is planning to fail. A good financial plan is necessary to maximize your income. Plan your finances, write a budget, save, and invest wisely. Having a goal is a good motivation to plan financially.
9. NOT SETTING LONG TERM FINANCIAL GOALS
Young adults are concerned about meeting short term goals; paying rent, buying foodstuffs, wearing good clothes, and acquiring new gadgets.
You need to set long term financial goals like starting a business, furthering your education or buying property, and work towards achieving it.
10. STAYING IN DEBTS
It’s frustrating to go into debt. Most people purchase their budget and the source of payback goes south. Being in debt due to borrowing comes with compounding interest rates.
Focus on paying your debts before you start saving for long term goals. If you’re working first take out a certain percentage of your income and pay off your debts gradually. It might take a while, but it will clear it off eventually.
11. HAVING UNREALISTIC FINANCIAL EXPECTATION
One mistake young adults make is borrowing money and making promises to pay back when they get a job they’re expecting or when salary comes without a backup plan. 98% percent of the time, their plans fail and leave them stranded.
12. SCHOOL IS NOT ENOUGH TO MAKE YOU RICH
You should understand that your education starts the day you leave school. The real world is different from the four walls of a classroom. The idea that school will make you rich after graduating is obsolete and should be erased from your thought.
Successful people learn daily even after they’ve left school but unfortunately, most young people stop reading the moment they graduate. You need to read good books, listen to insightful programs, and follow up on lucrative trends.
13. INVESTING WITHOUT CARRYING OUT A RESEARCH
Investments can be very rewarding if you’re not throwing money away on shares and Ponzi schemes. As a young novice, you need to do proper research and study some books on investing.
Reading good books about stock markets and real estate will save you the headache and tears that come with losing your hard-earned money.
14. CHOOSING A PARTNER WITHOUT KNOWING THEIR FINANCIAL CAPABILITY
This is another mistake young adults make in their 20’s, they go into marriage without knowing the financial capability of their spouse. And a few years later, everything begins to crash because their finances were not able to sustain them.
Before you say I do to anyone, sit them down and talk about your finances. Agree on your income and expenses, know the financial background of their spouse. As you plan the future together, save and invest for uncertainties that are bound to occur.