Financial literacy comes to a person far from immediately. In young years, people make a lot of money mistakes. After all, they still have very little experience in dealing with personal finances. Yesterday's graduate can find a good job with decent earnings, but he does not always know how to properly manage money. We will tell you about the most common financial mistakes that young people make.
Loans
Many young people are actively using credit cards. They pay for their purchases in stores and on the Internet. The habit of constantly paying with borrowed funds is a direct path to debt.
Credit cards often have a high interest rate. It can reach up to 20%. Remember that with the active use of the card your debt may increase several times in a few years.
If you are not able to quickly repay the entire loan amount, then try to use the card as little as possible.
Do not miss monthly credit card payments and always pay the full amount. Debt to the bank can significantly complicate your life. You will ruin your credit history, and correcting it is not so simple. In the future, it will be very difficult for you to get a mortgage or car loan.
This does not mean that you need to completely abandon loans. But before you borrow money in a bank, objectively assess your financial capabilities.
Experts advise young people to draw up cards with a small limit and a low interest rate, and then make payments in good faith. This will form a positive credit history and will help in the future to easily get a loan from a bank.
Incorrect prioritization
If you already have several loans, then you need to learn how to prioritize correctly. Often young people make a common mistake. They are trying to quickly repay the largest loans.
However, experts advise doing otherwise. You need to pay attention not to the size of the loan, but to the interest rate. This indicator is very important. First of all, you should try to pay off loans with a high interest as soon as possible. After all, they represent the main danger to your financial well-being.
Lack of financial goals
Young people often spend money spontaneously. However, you need to plan your expenses both in the short and long term. Therefore, you need to set yourself financial goals.
These goals may be short-term. For example, in the near future you need to save money for a trip or summer vacation. However, it is necessary to set long-term financial goals, such as making deposits or purchasing your own housing.
Setting a financial goal is just the first step. Next you need to analyze your income and expenses. Estimate how much money you have left every month after all the necessary expenses. You can start saving these funds to realize your financial goal.
Lack of emergency savings
Many young people spend all their money. They do not save money "for a rainy day." This is a big financial mistake.
If you do not save money for emergency cases, you may have financial problems at the most inopportune moment. Indeed, in life there are unforeseen emergency circumstances. You may not have the funds for the necessary treatment when you are sick, or for expensive car repairs.
In addition, job loss cannot be ruled out. Therefore, you should always have funds for living at least for a period of 3 - 6 months.
Lack of pension savings
At the age of 20-30 a person hardly thinks about retirement. However, making savings is still worth it. Youth is a good time to create retirement savings. After all, you are full of strength and able to work productively.
The sooner you start saving for retirement, the less material problems you will have in old age. Even if you save about 4,000 - 5,000 rubles from each salary, by the age of 55 - 60 you will have a considerable amount. Therefore, it is not worth neglecting such a financial habit.
Keep savings at home
Quite often, young people keep their savings at home. But this is not the best way to store money. These savings do not bring you income. In addition, there is always the temptation to spend money.
If you save for retirement or for long-term goals, it is better to put them on a deposit or invest in an investment fund. In this case, your savings will gradually, but constantly increase.
Life beyond our means
Often young people spend too much money. They want everything at once - beautiful clothes, travel, a good car, etc. This desire can be understood. But always measure your expenses with your income.
If your salary does not match your expenses, then reconsider your expenses, otherwise very soon you will be "aground" or will be forced to get into debt. To avoid such troubles, live within your means. Buy only what you really need. Never buy things in order to impress others.
Buying cheap things
If you buy cheap things, then this is far from the best way to save. Such a strategy does not work in the long run.
Cheap items are usually of low quality. They are unlikely to last you long. Very soon you will have to replace them and make new expenses.
It is much more profitable to purchase one solid thing for a long time. Therefore, try to buy the highest quality products that you can afford.
Savings on insurance
Young people rarely think about unforeseen difficult and sad circumstances. Therefore, they often refuse to cover the costs of housing, property, health and life insurance.
Experts believe that saving on insurance services is not worth it. After all, not a single person knows what will happen to him in the future. If you find yourself in a difficult situation, then insurance will help at least partially cover your expenses.
Conclusion
It is very important for young people to form useful financial habits. Try to increase your economic literacy. Study the literature on this subject, listen to the advice of older friends and relatives. You can also attend courses or attend financial literacy webinars. This will help you avoid many mistakes that can worsen your financial situation for years to come.