As a young professional, I can tell you that we as a generation make a lot of financial mistakes. Some of it can be attributed to youth, some of it to our own family financial history. That being said, many of these mistakes are catastrophic, and have long-lasting effects well beyond our youthful years. The key is to learn what those mistakes are and to avoid those financial pitfalls so that you don’t end up kicking yourself throughout your 30’s.
Living Outside Your Means
It’s easier said than done that you should learn to create a financial budget for yourself in your 20’s. In college it’s hard to live too far beyond your means because face it, we’re all broke. It’s when you get that first job and a real paycheck that so many of us seem to stumble and fall. Why is that?
It’s exciting to have that regular paycheck come in, and it’s easy (at least in the beginning) to ignore some of the financial commitments you may have. There’s also so much to do, it’s easy to get caught up in living a lifestyle that is outside of your budget. While it may be hard to scale down how you live your life, you’ll thank yourself in 10 years when you’re not just working to pay off debt, and have no savings.
No Savings Account
The old adage, “a penny saved is a penny earned” is certainly still true today. You may not think it’s important to have a savings account, but the older you get, the more important it is. Like many of us, I’ve often lived from paycheck to paycheck without any savings. If my car broke down, or I had unexpected medical expenses, I really had no way to pay for them. Having a savings account would have definitely come in handy, rather than going to my parents with a sob story for a hand out.
Not Reading the Fine Print!
To be young and fancy free is to feel that there are no restrictions on the things you commit to and how you live your life. I cannot tell you how many times either I myself or freelance contractors I work with don’t read the fine print. Believe me, it will come back to bite you in the end. It may seem tedious (and it is), but it’s there for a reason. Think of it as protection for yourself. What you don’t know really can hurt you. Ignorance isn’t a good enough excuse when it comes to legal matters and financial commitments.
Not Filing Your Taxes
Raise your hand if you wait until the last minute to file your taxes. Why is this a mistake? When you wait so long to file, you may miss important deductions that can really save you a lot of money. You can even get more money back if you keep all of your necessary financial paperwork and have a professional help you find every penny possible.
Bottom line, while it may be fun to spend away like there’s no tomorrow, it won’t take long before those decisions will catch up to you. You can save your future self a headache later by doing small things now. It will be worth every little penny you don’t spend.
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