Some people wait until their adult years to get serious about their personal finances. But developing good money habits during youth or as a young adult can put you on the right path financially. Rather than make unwise decisions and spend money frivolously, change your personal habits and increase your personal wealth.
Many young people do not bother about proper financial planning until they become older. Experts say young adults, especially people in their 20s, often feel they are too young to think about owning their own homes or ‘major’ financial projects. As a result, they wait until much later in life. By the time they are ready to get their finances in shape, experts say they would have made several financial mistakes that are capable of making the journey to financial freedom an arduous one for them.
Read more after the cut..........
Choosing liabilities over assets
According to experts, this is one of the most common mistakes young adults make. They explain that they have a tendency to chase trend and to obtain the latest gadgets and the likes, regardless of whether they need the items or not; whether they will achieve financial growth by obtaining them or not. Experts, however, warn that many of these objects, being liabilities, cannot help the users to grow their assets.
Ignoring discounts
To some young people, buying on discount makes them cheap. Some even avoid outlets advertising discount offerings; they don’t want to be seen as cheap. But experts say while peer pressure has led many young adults to consider discounts as an option for poor or ‘cheap’ people, those who take advantage of discounts are in reality financially smart.
According to them, virtually all year-long, there are retail outlets, hotels, schools, banks, etc., offering discounts and young people stand a great chance of boosting their finances by getting goods and services from such outfits. If your profession requires you to fly regularly, you could approach the airline you patronise and ask for a special deal. The same goes to businessmen or sales professionals who spend hours on the phone; there is no harm in making arrangement with the phone company for a lower tariff.
Renting expensive apartments
The goal of money management is financial freedom and independence; a situation where you can take care of your needs and live comfortably. The ‘challenge’ is that you have to make some sacrifices. According to experts, young adults find it difficult to make these sacrifices, especially where their comfort is concerned.
One area where this reflects, they explain, is when it comes to renting houses or building one. According to them, many young adults rent houses that are beyond their means. By getting a place that is very expensive, you may find yourself without money for some of your financial needs, which are supposed to boost your chances of achieving financial freedom. This is because, not only will you be paying a huge amount as rent, you will also have to cough up a lot of money to maintain the home. Celebrities often make this mistake. Little wonder when they hit a rough patch financially, their homes are often put up for sale.
Failing to draw up budgets
Imagine trying to build a house without a plan or leaving your house with no destination in mind. That is what experts say it is like when people try to implement a financial plan without a budget. The budget is meant to be a guide, a part of the plan or foundation of that financial plan. The benefits of drawing up and implementing budgets are numerous. Yet, many people fail to make their expenses budget-based. As a result, they cannot track their expenses and have no clue what they spend their money on. Such people are likely to spend more than they should, running into debt and ultimately financial ruin. Budgeting is not just about saving money, it is about making you financially responsible. And that is key to the attainment of financial freedom.
Not planning for emergencies
Young people are adventurous, often taking risks in the belief that everything will work out fine. Experts say many young adults do not bother to make plans for emergencies. Some will use up their savings and even borrow cash to finance the purchase of a car without thinking about maintenance, insurance. Some do not even think they are capable of having a health emergency. This sort of people are likely to say things like, “If not for that accident, I was coasting financially.” In order to avoid such outcomes, experts advise that people should have emergency funds. So, apart from just saving for a car, wedding or marriage, it is important to have an emergency fund. You never know.
Disregarding details
According to experts, many young people do not bother with vital financial details because they deem them too little. Many young people do not scrutinise their bills or keep them. They do not review them to know whether they are being short-changed or not. When they use financial services, they do not bother about interest or service charges. The truth is that by ignoring these details, they are likely to, and often, lose thousands of naira – in SMS charges, transfer charges, etc. If you spend N300 every day just to go and purchase an item worth N200, you will be better off subscribing for the item. Remember, that may even give you a discount.
Not taking care of their health
Many young people fail to realise that their health can deteriorate over time. Experts say they assume that they will remain strong and healthy. Consequently, as older people avoid the rain and the sun, as they go for regular checkups and go for health insurance, young adults sustain risky behaviour health-wise. This leads to health problems and loss of huge sums of money on treatment or medication.
Paying avoidable fees
There are many costs experts say people should avoid paying. These fees include excess baggage charges when travelling by air, traffic tickets, late registration charges and so on. Yet, experts say young people are notorious for ignoring such advice and paying these fees. Over time, they amount to hundreds of thousands, gone down the drain.
Planning just for today
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 to figure out what you need to do to afford your dreams. Also, don’t forget to check in when major life changes occur, as your financial priorities will probably shift too.
Ademola Alawiye
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