Young people tend to make quite a few financial mistakes due to their ego and lack of experience. If you want to become more skilled with handling money, it is important that you learn about some of these mistakes and how to avoid them. Getting this information can mean securing your financial future and avoiding lots of problems that have become all too common with millennials.
Misusing Credit Cards
Perhaps one of the bigger financial mistakes young people tend to make is misusing their credit cards. Obtaining a credit card can be a very good idea, but only if you use it properly. You shouldn’t treat these cards like free money, because they aren’t. It’s incredibly important to stay on top of your credit card payments to avoid going deep into debt. It is also crucial that you have a have a full and complete understanding on how this line of credit works before using it. When put into the wrong hands, a credit card can be very damaging to one’s finances over the short and long term.
Failing to Take Advantage of Discounts
When you actually spend some time looking around, there are many discounts that you can take advantage of for just about everything. Whether you are buying theatre tickets or even a new car, it’s important to look for the discounts. You will quickly discover that these discounts can provide you with some pretty major savings. The more time you spend looking into these options, the more money you will save over the years.
Buying a House
There is nothing wrong with wanting to own a house, but doing so at the wrong time can cripple you financially. A lot of young people are making the horrible mistake of taking out a home loan they really cannot afford. Even getting one of these loans without putting down at least 20% is a huge mistake. You should take the time to review your financial situation before making this kind of life-altering decision. The last thing you want to do is to make such a big commitment before thinking everything through.
Not Maintaining an Emergency Fund
Everyone should have some funds set aside in case of an emergency. You don’t want to find yourself stuck in a situation where you really need money that you just don’t have. Make sure that you take a little bit of the money you make with each pay check and put it in a separate account. It is always a good idea to have a savings account at your bank that is dedicated to financial emergencies. Those who have some money set aside will be able to reduce their stress level quite a bit.
Neglecting Smaller Expenses
The fact is that all of these little expenses that you have on a daily basis add up. Whether it is buying a £4 cup of coffee at Starbucks or something else, you need to keep track of the money you spend. You might find that you are actually living beyond your means, and it will eventually catch up with you. If you find yourself struggling with money sometimes, it might be a good idea to take stock of your regular expenses and reign in your spending.
Not Refinancing Loans
Sometimes it is a genuinely good idea to refinance a loan you have. If you feel like you are paying far too much for your loan, you should seriously consider this option. Auto loans are the most common to be refinanced, but you can do this with any type of loan. This is not a worthwhile option for everyone, but it could help you quite a bit. The same goes for payday loans and other short term finance arrangements.
It is quite common for young people to budget poorly or even not at all. If you do not have a solid and realistic budget in place, you are bound to have serious financial problems at some point. You should take some time to write down all of the recurring expenses you have. This will give you a basic idea about whether or not you can afford something like a new car or a nice flat screen TV. Use your budget to avoid making financial mistakes that could end up crippling you for a long time.
How does a Young Person Stay On Track Financially?
If you are a young person who has money problems or just wants to be fiscally responsible, it is important to learn from others. You should use every opportunity you can to learn from your parents and other people who have more experience than you with managing finances. It is also important that you never spend what you cannot afford to, because you will just end up regretting it. These simple but useful tips can help you stay on track financially.