Top 5 financial mistakes young people make.
Common Financial Mistakes That Young Adults Often Make
Starting out in the “real world” as a young adult fresh out of school or college is a very exciting time, but your freedom as an adult can come at a price. These days, daily life is expensive! Expenses that you’ve never had to worry about before like rent, transport, food and general living can quickly add up and dampen the party.
When speaking to older adults, most of them say that wasting money on superficial things that caused debt and not saving or investing were two of their biggest financial regrets.
Let’s look at 5 financial mistakes young people make, and how to grow financially wiser before you get older…
Not Budgeting
Budgeting is the key to a debt-free life! If you don’t know how much you have and how much you’re spending, money can quickly disappear. However, if you have a budget plan drawn up, it will keep you on track and in financial control.
Remember, if you don’t tell your money where to go, it will find a place to be spent. This is especially true when it comes to daily expenses like food, entertainment, and convenience items. A handful of bad habits can cost you hundreds of rands every month so track and spend wisely and you’ll soon start to see the savings.
Getting into Debt
A lot of people are struggling with debt and if it starts adding up, it can be very difficult to see the light at the end of the dark debt tunnel. Already in debt? Try paying off the highest interest card first and get that account closed as soon as possible.
Got a student loan? This is one of those things that stops many people from buying a home or saving money because they never recover from the loan. We know it’s not possible to go back and not borrow the money, but it’s important to have a plan on how you are going to deal with your student loans. If you’re still in college or university, try to borrow as little as you can once you’ve set up your monthly budget. Think about getting a part-time job to help you pay expenses. You’ll never have more time and energy than you do right now!
(PS. Need debt advice? The team at Meerkat can help!)
Not Saving
If you don’t budget to save every month, life can get quite daunting in cases of emergencies like an unexpected medical bill or car repair. One major crisis could easily put you into debt that could take years to pay off. And remember, even if you’re lucky enough to avoid an emergency, having no savings can make it harder to reach long-term goals like owning your own house or buying a new car. Most financial experts suggest saving at least three months’ worth of salary, if possible. Don’t forget to include your savings in your budget until it’s fully funded.
Not Investing
Saving money is important, but it’s usually not enough. To build up a healthy financial future for your later years and retirement, it’s always a good idea to invest. Although investments are riskier than keeping your savings in the bank, they do offer a much better chance to grow your money over time. It might seem pointless thinking about retirement or buying a house when you’re still young, but just remember that the sooner you start, the better.
Not getting on top of debt
If you’re still young and already in debt, there’s a need to panic. You also don’t need to feel alone trying to figure all this out! Contact us at Meerkat and we’ll help guide you towards a debt-free future.