7 Biggest Money Mistakes Young People Make & How To Avoid Them
Being wealthy is great, but what’s amazing is attaining it at a young age is heavenly. Who wants to buy or build their first house after retirement? Or rely on a pension to pay rent at an old age? How about struggling to pay school fees for your kids later?
You can have your finances settled whilst you are young, especially in your 20s. To do that, it is essential to know what mistakes to avoid and how.
This post sets out to expose 7 mistakes to avoid in your 20s. I’m excited for you already!
1. Resenting The Rich
Mindsets and habits learnt as a child can hunt you down and limit your progress as an adult. Some of these habits are learnt unconsciously. For instance, you saw movies where the rich oppressed the poor and where rich people were always projected as bad people. Or you lived in a neighbourhood where the rich were scorned and are items of the gossip columns. These all contribute to what are your beliefs and habit systems.
Holding on to this thinking as a young person is one of the biggest money mistakes you’d ever make. You think being rich is the same as being unholy or evil, which makes you unconsciously attack money in your mindset.
You might not know this but, that’s the reason why you can barely make enough to have good savings. You simply make just enough to get by or even if you make more than enough you spend it so as not to retain IT to become RICH.
If you can identify with this line of thoughts , you need to be intentional and help yourself to change the thoughts to enabling one. Seek the good in the RICH and admire IT.
“What’s the highway without those flashy cars anyway? They light up the streets. Way to go!”
That’s how you should think. Not- “This is a total waste of money on a single ride. He could have gotten a little car for half that amount and given the remaining money to the poor”
Well, your low cost car can also feed the poor. How about selling it, part with half the money too and get yourself a bicycle instead? You’re harming yourself with that thought pattern. Love rich people and their wealth. That way, you would want to be like them and acquire the inner strength to get money.
2. Having A Subsistence Goal
As a young person in your 20s, it’s not too early to have plans for wealth. Riches won’t fall on your laps. If you want to be rich, set goals to be rich, not just to have enough and be comfortable. Having a Sustenance goal robs you of big plans and leaves you without energy to carry out big projects.
Avoid the subsistence money trap by having long term financial goals. Where do you want to be financially in the next 5 or 10 years? Have big goals for your finances that are beyond NOW!
3. Borrowing Money /Living on Debt
I'm not about to tell you that loans are bad. However, you might want to be careful about what you get into debt for.
Motive is extremely important and can determine whether an action is good or not. Imagine getting married to a partner because he has a lot of money and eagerly planning a divorce right after because of what you’ll gain. Though marriage is great, but with that motive? That marriage is a disaster from the start.
This applies to your finances.
Why are you borrowing that money?
To buy a car? Wait…. To buy that iPhone?
Now, if you’re not going to use those things for business, it’s a bad debt.
It’s unwise to buy a car or a phone with borrowed money when you’re not expecting returns from them. You’ll incur more debts and have a hard time paying.
4. NOT Having A Spending Plan
Not having a spending plan is evidence of lack of control over your finances. You must plan your income in categories;
If the percentage for spending in a month is 60%, once that 60% is exhausted, you don’t have money to spend again, regardless of what’s available at the other allocations.
You cannot take money from your savings to buy your groceries. This will help you plan your spending around the allocated budget.
5. Impulsive Buying
You see it- you like it- you want it- you get it.
STOP THAT. No one lives that way and gets rich.
See how to control impulse purchase in this post– “ Two words that will change the way you shop”
6. NOT Tracking Your Expenses
This is one major mistake young people end up being BROKE is not tracking your spending. If you are not learning to track your expenses, you’ll end up broke again at the end of the month.
You need to know where your money goes and keep records of every purchase. You’ll soon realize there’s no devil devouring your money, you simply have been spending too much on shoes and designer bags.
Get a notepad for the purpose of keeping record of every purchase you make and review it at the end of every week. This will help you see how wise or careless you have been with your money and help you be more prudent. There are a number apps that performs the same function; spending tracker, wallet, money manager expense & budget e.t.c
7. Schooling is a CAREER
What is your usual reply when you’re asked what you do? Do you answer “Oh I’m a student”?
Candidly, in your 20s that reply is lame.
You don’t have to live off student loans and monthly allowances (which are usually never enough) . Every student can pick up a remote job or part time, turn a hobby into an income generator, pick up a skill…
Next time, when asked what you do, you’ll be able to answer “Oh I make the best pastries and i’m also a student”, or, “I’m a content writer and also a student” Now that’s better.
Your 20s is a critical period. The older generation learnt by making a lot of mistakes in this period. You can learn by simply avoiding them. That’s a sure way of making financial progress fast and early.
DO NOT WAIT TO BE IN YOUR 30s BEFORE CHARTING OUT YOUR FINANCIAL MAP/PATH.