10 Mistakes Made by Young People in Money Management–At the young age, there are some unforgettable moments that can influence our mind, wisdom, point of view, maturity, and intelligence. In this stage, we also learn new knowledge from this universe theoretically and practically. Experience can be achieved and learned in our life in this world. In our activity, every person can learn anything. Many positive and negative moments can happen in our journey at a young age. The painful and unpleasant experience can make some scar memories in our pathway, but it is indispensable to add knowledge to our life and strengthen the people’ mentality. Basically, some mistakes that young people make occur because of less thinking of its effect in the short and long-term. But with many mistakes and failures, some young people can learn from the past and add their experience to face the same problems, obstacles, and challenges in the future.
In specific aspects, in financial matters, individuals can experience the bad and good moments in our life. Maybe some people can make mistakes in money management. With less knowledge and experience, we also make mistakes in managing the money. The loss of money and everything can happen to every person in their life. It can make for miserable situations and difficult conditions. Some of the effects are very painful to our lives. By the way, here are some of the common mistakes that young people usually make in managing money.
1. Unknowing to manage the Money.
These conditions happen when they don’t know how to divide/ allocate the income or salary that they have earned. Many young ages can’t do the right things in money management. They didn’t understand how to allocate the income in their daily life at that time. Without planning and allocating its money, they just have wasted their money without knowing the goal that they used their money for. They just spend their money without considering the effects of their actions.
2. Uncontrolling the balance between the income and expenditure.
Incoming of the money from salary, sales of goods and services, and the others can be used to fulfil the needs of the humans in their life. But the desire for everything can drive our wants to buy something illogically that we just want for a while but it’s not what we fully need in the future. Our challenge in young age is to allocate wisely in our money to use efficiently. Maybe miscellaneous and uncontrolled desires can accelerate our money in empty conditions.
3. Fulfilling the need that out of our income
Sometimes, with no experience at a young age, the balance sheet between income and expenditure can be imbalanced. Because we didn’t plan it early. Without planning and controlling our budget. Some expenditure can exceed the income and it makes the deficit of our budget. Many young people are tempted by the environmental conditions. Their friends and family can influence our principles of managing money. With glamorous friends, we just have a glamorous mind and allocate the income to buy fashion style clothing or products. They usually forget to save and invest their income. Some of them prioritize the money to buy useless glamorous apparels rather than saving it.
4. No Saving Priority in the early
Saving is an important aspect in managing the budget. Saving can be useful in unexpected and unpredictable conditions. Some of those conditions are accidents, our health that can’t be calculated precisely. That’s important to save our income. In some conditions, people forget to save it and feel frustrated when the unpredictable conditions happen.
5. No insurance Budget
Maybe insurance can be useful in our conditions. Some of us may feel the unusualness of our budget to sacrifice some of our budget to buy some insurance products. Cars, education, health insurance can reduce the cost of the expenditure when the bad conditions happen. Car accidents, the problems of our health, and the unpredictable cost of university fees can be reduced by buying some insurance products that we usually need.
6. Taking Credit to fulfil our needs
Credits sometimes become the short-term solution in every unpredictable problem. But, Sometimes, too much credit with interest rate that attached to it became a disaster to our debt. We must pay back our debt plus interest rates. Debt plus interest is a loss to our budget. We must pay more than our original debts.
7. Not Buying Investment products
Not buying the assets like home, lands. Stock, gold, mutual funds make it more unwise. Basically, the assets products can’t experience depreciation. The prices probably will soar and can increase from time to time. Buying investment products may be one of the solutions to cope with the depreciation of the value of money from time to time. Furthermore, these assets can be useful to help us in certain conditions.
8. Lending more money to other people or friends
People and friends always become integral parts as social human beings. Most people can lend to help more people with their excessive funds. But there are some cases, as a human, we must help our friends with our funds, but we can’t refuse because of our strong relationship with them. Lending more money that can disrupt our budget should be avoided. In some cases, this condition can happen when we are too good to our friends and relatives but sacrifice our life.
9. Not making a Financial Record
Every record process of financing can be useful to our managing process. We can track our budget every time. In some cases, we can’t do that, so we don’t know our allocation and expenditure. Financial record can give the record of our spending and usage of money every time and we can check it every time. With a financial record, we can be disciplined with our money and allocations. Without a financial record, people can’t control their spending and can’t evaluate every aspect of it.
10. Not Learning Skill relating to managing the money
Every time and year, there is always a new knowledge of investment and financing skills. Knowledge and science can develop from time to time. Furthermore, there is a new product and services relating to money and investing from time to time along with the new era. We can learn about the education of money management and investing. There is something new in the world. Following the online classes and webinar relating to financial and investment is always good education to add to our horizon about money management. When people don’t follow the money management knowledge, they don’t update the development of the money management. Their knowledge is limited with conservative values.