You might think that you don’t have to make serious financial decisions while you’re young. But, the truth is, now is the time to set yourself up for financial success. The choices you’re making today can and will have a massive impact on your finances for the rest of your life. To make sure you don’t end up regretting your choices, here are some of the most common ones to regret.
Starting to budget too late
Budgeting is often thought of as a bad word. It’s thought to be restrictive and controlling. But the truth is, a budget is just a plan for your money. It tells you what your priorities are and where you should be allocating your money so that you can meet your goals. And if you don’t have one of these while you’re young, you’ll never learn how to properly allocate your money. That’s how you end up wasting your cash.
Not making the most of your career
Your career is yours to shape and define throughout your life. But it’s important that you make the most of it while you’re young. Take advantage of every opportunity to learn, from participating in staff training courses to trying out a new skill. You might end up working somewhere you might never have thought possible, from literally in a foreign country to literally in a different field.
Not paying off your credit card in full each month
This is an essential lesson to learn early on. You need to make sure to pay this bill in full every month. If you don’t, interest will soon begin to add up. And if you have this essential habit in place, you’ll learn to only spend within your limits. You’ll never offer to buy that entire round of drinks for your friends. And you’ll never buy a new wardrobe every few months.
Not researching financial products
It’s pretty easy to feel daunted by financial speak and jargon. So, if you’re considering an investment in unit trusts or ETFs, it’s essential that you understand fully what you’re getting yourself into. You might be paying far more in fees than you realise or not earning nearly enough interest. All of this might have been avoided if you’d read the fine print a little more carefully.
Not prioritising your emergency fund
Something will happen which you didn’t plan for. You’ll be in a car accident, your geyser will burst, you’ll break your leg or you’ll lose your job. These are emergencies and there’s no way you can plan for them. But you can be prepared for them. And that’s what an emergency fund is for. It’s that little stash of cash that’ll be there to help you out when you most need it. It’s important that you save toward this each month until you have at least a year’s worth of expenses safely saved.
Buying a brand new car
Face it, a car begins to depreciate the minute you drive it off the showroom floor. Would you willingly ever buy anything that loses a massive part of its value as you walked out of the shop? Of course you wouldn’t. So, why do people think it’s okay to do this with a car?
DIY investing
You’re never going to watch YouTube videos on heart surgery and attempt an at-home-version. So, why would you try the same when it comes to your finances? Just because you’re familiar with a company or have heard about it on the radio, doesn’t mean you’re knowledgeable about the ins and outs of its inner workings. Certainly not knowledgeable enough to invest in the company. Leave investing to the pros, either by consulting a financial advisor or using index funds.
Not prioritising insurance policies
There are certain insurance policies which you can’t do without. Car insurance, house insurance, home contents insurance, medical insurance and income protection. These are all essential and could save you a whole lot of money should the worst happen.
Putting retirement savings on the back burner
You’re young. You think you have plenty of time. But saving for your retirement while you’re young will be one of the best decisions of your life. Because compound interest is on your side, the money you invest now will have more time to grow. That’s your money making money, while you go about your life. And who wouldn’t want that?
Failing to discuss finances with your SO
You probably haven't even met your future significant other yet. But when you do, you’re going to need to start a culture of discussing everything important with them. Finances are one of the most important conversations you need to have on an ongoing basis with your partner. Money is one of the most common reasons couples split. Don't let yourself be one of those couples.