The world is a great big place, but sometimes your wallet feels too small to go out and see any of it. Other times, you might feel like you're on top of that world and have nothing to fear when it comes to finances.
Confidence is a fantastic feeling, but it's critical that your money situation reflects that confidence honestly. One simple mistake could start the falling dominoes that lead to financial ruin. Don't let that happen -- instead, learn from this blog post about seven common mistakes that you should never make as a young person!
1. Living Like There's No Tomorrow
People love to talk about the value of living your life to the fullest. In fact, you've probably heard the phrase, "Money doesn't buy happiness."
Maybe money doesn't literally purchase happiness from a happy store, but you'll feel like a million bucks after writing the last check to pay off your eventual mortgage.
So don't spend your days frivolously spending everything in your wallet on fun experiences. Be smart, and spend your money on what really matters.
2. Forgetting to Save or Invest
This point has a lot to do with the last one -- if you don't think ahead about the future, you might not have much of one.
That's why it's so important to have a smart budget. Even if you're still in your early 20s, that extra money burning a hole in your pocket might go to more use if placed in a savings account.
And remember, just because you're a young kid from Palestine, TX doesn't mean you can't start investing in stocks or even something more interesting like crypto-currencies!
3. Only Making Minimum Payments
If you've taken out a loan of any kind -- an auto loan, a home loan, or a personal loan from a lender like Atlas Credit -- one of the smartest things you can do to help your wallet, your credit score, and your future is to pay more than the minimum payment.
The minimum payment is really more of a suggestion. It's the bare minimum of what you could accomplish. But even by paying just a fraction higher each month, you'll be that much closer to paying off your debt.
4. Borrowing Too Much to Pay for Graduate School
Student loan debt has become a huge pitfall in our society. While pursuing higher education can help you land a higher-paying job, going back to school just for the sake of putting off the real world for a few more years can saddle you with even more student debt that you may not be able to handle.
Only go back for a graduate degree if you have a clear vision for your future, and you need that degree to succeed. Otherwise, see how you fare in your career without wracking up additional debt.
5. Not Exploring Student Loan Payment Options
If you do have federal student loan debt, which is a prominent personal finance hurdle for many millennials who want to improve their financial planning, you should explore programs that allow you to pay it down or pay it off more efficiently. You may qualify for Public Service Loan Forgiveness, for instance, which will forgive your debt after you make a certain number of payments.
6. Refusing to Use Credit Cards
One of the financial missteps young people should avoid is falling too far into debt with credit cards. It's tempting to charge, charge, charge until your bill comes, and then you realize you have spent beyond your means.
But not using credit cards at all to avoid overspending is a mistake, too. You need to build credit to qualify for things such as buying a house or a car. The older you are when you get a credit card, the more red flags it raises. Just use your card carefully, and pay your bill off each month.
7. Not Paying Your Bills on Time
You should learn how to budget in your 20s, so you have enough money to pay your monthly bills. On-time payments help you build good credit and show lenders that you can handle the responsibility of a loan.
Paying a bill a few days late may not seem like a big deal. You may even have the money, but you just have trouble remembering deadlines, or you didn't write down when the bill was due. If this happens month after month, though, you build a pattern of financial irresponsibility that looks bad on your record. People won't trust you to borrow money because you don't keep your word.
Creating a monthly budget can help you stay on track for making bill payments on time. Here are a few things you can do to build your budget:
- Total up all your monthly expenses, including housing, car payments, utilities, groceries, credit card payments and subscription payments.
- Tally your monthly income after taxes and make sure you can cover your expenses with what you take in.
- Set up automatic payments from your bank account each month to cover your bills, ensuring you won't pay late anymore.
- Put reminders on your calendar about the payment dates so you can make sure you have enough money in your account to cover the bill.
7. Not Communicating With Your Family
This point applies to any important person in your family. Whether you have a spouse, still live with your parents, or have a frugal old aunt, communicating with them can be unbelievably constructive.
First, it helps you to voice your own concerns about your money issues. Second, the feedback you'll receive will most likely help you put your situation into context. Older family members especially have been through far more financial experiences than you have, so learning from them can be invaluable.
And third, you might find a solution to whatever money issues you have that you might never have considered. For instance, if you live in Oklahoma or Texas, a personal loan from a nearby lender like Atlas Credit could be just the quick fix you need to set your finances back on track. Apply online or contact us today to learn more!