Usually people in 20s which are also called teenagers or teens, these people in this range of years do some common mistakes that can affect their whole entire life due to not pay attention at their young age activities and doings. Here are some common mistakes they do and how you can prevent them from happening and how you can recover from them if you have started doing them.
1. Living Beyond Your Means
Mostly people at young age spend more money than they earn mostly in things like shopping, buying expensive gadgets, food delivery, rent this can lead you to financial stress
What to do instead?
To overcome this problem of spending money on unnecessary things use budgeting apps or spreadsheets but for my opinion follow 50/30/20
- 50% for needs
- 30% for wants
- 20% for savings and debt repayment
N.B: Once you receive your salary or money is good to first identify needs and wants and prevent to use money in useless things.
2.Not saving for emergencies
A lot of young people don't like to think of emergency situation due to their lifestyle and health conditions briefly they can't think that they can also be sick, lose their jobs or to recover them in simple but hard situation like breaking your phone.
What to do instead?
Try to build emergency fund start saving as small as you may be weekly, daily or monthly but save that money and utilize it only for emergency situations not to fulfill your needs or wants the amount of money you start to save for emergency after sometimes you will truly see their importance
3. Delaying retirement plan?
Many young people think that becoming old is a long journey means they don't need to worry or start saving and making the retirement plan yet that's not true once you don't plan it at young age it will be difficult when you are old you might be having a lot of responsibilities and expenses for certain person, bank loans or solving family issues.
What to do instead?
Start saving with even low amount of money especially find a bank or an insurance company that offer those retirement savings
- Open your retirement account (IRA) if you are self employed
- Contribute to your employer's retirement plan if available
4.Taking on unnecessary debt
we borrow money for various purposes like car loans, student loans or credit cards once they are utilized in the way which isn't properly can lead to financial stress and some people get debts for luxurious things and lifestyle which also not a good idea for people with financial issues or people with low income
What to do instead?
- Borrow for only what you need(necessities)
- Always understand loan terms and policies before signing
- Avoid high interest credit card debt
5. Lack of financial plan
Reaching in 20s and not having clear goal of what to do with your income it can commonly affect your age when you are old and can be hard for you to adopt culture of savings.
What to do instead?
- Set SMART financial goal for example:
- Saving 1000$ per month
- Paying debts in 2 months
N.B: SMART means (Specific, Measurable, Achievable, Relevant, Time-bound)
6.Financial illiteracy
Not all people like to learn about money and yet it's very good to learn about money in order to make good financial decisions.
What to do instead?
- Reasearch about finance on trusted blogs and YouTube (Recommended)
- Reading personal financial books example:' Rich dad poor Dad'
- Learning online free courses 0of financial or money management
7. Not Investing in Yourself
Young people think making money is the first thing in 20s yeah that good but investing your time and some resources in leveling up your own skills and personal growth can be a good idea, but a lot don't like to do it, yet it brings a lot of opportunities in life which can help you even get wealth or financial freedom.
What to do instead?
- Learning new skills in life through taking courses (example: graphic design, coding etc....)
- Attending networking events and seminars in your filed of work
- Seek career coaching and mentorship
- Listening to podcasts and reading books can help you elevate your skills too?
