The 5 Money Mistakes That Will Cost You Your Youth
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“How do I save money –“ “How about we find the square root of 2385 and draw out the cos and sin graphs?” “No, I mean like, can we learn some financial litera-“ “What are three characteristics of the Paleolithic Age?”
Every one of us make mistakes with money. We do not save enough, or we spend too much on something silly. It’s because we’ve never really grown up with real education on what money can do for us and the world (except maybe in Econs class?), and our school system isn’t fully or really equipped to educate us about money.
Money is as personal as you can imagine it to be, and everyone’s relationship to money is different. In fact, they even found that money can literally change your motivations and your behaviour.
Now that we’ve grown up and it’s way too late to think about the 101 — there are ways to avoid the pitfalls of money mistakes. Thanks to the experts at imoney.my, they have told us all about the some of the financial slip-ups to watch out for at each decade of your life.
Avoiding these financial mistakes as you go along can save you a lot of stress and money, both now and in other stages of your life. Read this and watch your fortunes change!
In your 20s…
In your 20’s, you are most probably new in the workforce, trying to work your way up. Unfortunately, this also translates to a low income but being young, socialising usually takes priority causing you to overspend and under-save.
Mistake 1: Overestimating purchasing ability
You may want to travel the world or buy a luxury car, but you do not earn enough to afford these things. If you cannot pay for these wants from your own pocket, you may end up incurring huge debts that hold you back for years. Get used to saving for the things you want instead of solely depending on credit.
Mistake 2: Delaying retirement savings
When you are in your 20s, retirement can seem far away. The earlier you start saving money, the more you will earn with compounding interest and the more comfortable your retirement will be. The money you save in your 20s is potentially worth way more than anything you will set aside in your 40s.
Mistake 3: Abusing credit cards
While credit cards serve a valuable service by providing convenience, they can also tempt you into living beyond your means. At this stage, your credit card bills can seem burdensome if you are not careful. Failing to settle the full amount, you may resort to paying the minimum balance only, incurring a big sack of accumulated interest. Create a spending plan based on your income and stick to it. Use credit cards only if you can pay the balance off in full at the end of the month.
In your 30s…
In your 30s it’s likely that you’ve settled down (it’s okay if you haven’t! These are just based on assumptions…), and so your decision-making shifts a little bit. You have started to plan for your family which may involve having kids. More and more financial responsibilities are pouring in, and it will take some finesse and strategy to balance your finances and provide the best for your family.
Not planning for your children’s future education needs
Holding your bundle of joy in your arms, the thought of him or her going to the University may seem like a future that is still quite a long way ahead. However, time flies faster than you could ever imagine. As the cost of a university education continue to rise, you should start planning for your child’s university fund right from the birth of your child. If you have more than one child to fund through university, these costs can become quite high. By procrastinating or not having an education fund at all, you may be forced to dip into your retirement fund before your golden years.
Taking insurance lightly
Individuals in their 30’s often neglect protection with adequate insurance. They often lose out on the chance to buy life insurance at a lower premium and delay the purchase of disability, personal accident or health insurance. Going without enough coverage is financially risky. With having dependents such as spouse, children and aging parents, it guarantees a financial safety net for your entire family if something were to happen to you.