One can reason that mistakes can make us wiser, but the truth of the matter is that as young people financial mistakes can cost us dearly in the present and future. When we go to varsity and start getting a government allowance, we think financial freedom means blowing it away. The following mistakes should be avoided by any young person who does not want to find themselves in money problems later in life.
1. Misunderstanding Credit Cards
Credit cards are often misunderstood by young people, with small purchasing decisions often leading to long-term problems. Whether it’s cash advances, large balances, only making minimum payments, paying late or not paying at all, the small piece of plastic can be much more trouble than you realized.
2. Not Utilizing Discounts
Banks, car dealerships, travel and cultural attractions. There’s a world of special prices for students and young people out there, but you can’t get to them if you don’t ask or research them beforehand.
3. Signing Up For Costly Rentals
If you choose a place that leaves you with only a little bit of money to do anything else, you’ll be stuck spending most of your time at home. You’re also more at risk of accumulating credit card debt for making up the difference in your lifestyle or paying for unexpected costs, like maintenance.
4. Not Having A Budget
If you don’t sit down to look at what’s left after your salary and fixed expenses, it’s hard to determine how much you can afford to spend on things like food, nights out, or an upgrade to your cell phone plan. Not knowing how much you have can easily lead to spending more than you can afford.
5. Not Having A “Rainy-Day” Fund
Setting aside money for emergencies gives you a cushion for unexpected events and helps you avoid adding to your credit card balance. You never know when your car needs repairs, or your bike gets stolen and needs to be replaced. This needs to be a key part of your budget, even if you start with a small amount every month. Eventually, the money will add up.
6. Failing To Realize How “little things” Add Up
You can call it “the latte factor,” but your daily trip to Sky Lounge, half-pack of cigarettes a day or P100 a week at your favourite local bar or restaurant can all add up to thousands of Pulas a year. A small modification in this kind of spending can help you put aside more for money for savings, retirement or paying down your debt.
7. ATM fees
Bars around here only accepts cash (of course) and you have no idea where the nearest bank machine is. So you use the conveniently-located ATM there for P20. Trouble is that transaction cost you an extra P10 and you do it four more times during the rest of the month. All those fees quickly added up to the cost of a lunch..
8. Falling Into The Automatic Pre-payments Trap
You linked your gym to your bank account figuring you’d never have to worry about having to pay a bill. That is, until you forgot it hadn’t come out yet and took out P100 for drinks with friends and left barely anything left. If the bank goes to get the monthly amount and finds nothing there, you’ll be hit with a giant insufficient funds fee.
9. Opening An Account With A Significant Other
You’re in love. What could show your commitment more than moving in, opening an account and sharing all your financial responsibilities? Doing so too early or without a clear plan for who pays what (and exactly how much) could be one of the most expensive financial mistakes you ever make.
10. Not Regularly Planning For The Future
Have plans to eventually own your own place, go to graduate school or travel the world? You may think planning for the future is only for people thinking about retirement, but everyone can benefit from financial advice. Speaking to a financial advisor or financial services manager can help you figure out what you need to do to afford your dreams.