Personal financing is a long-term process that requires continuous planning and fine tuning as long as decision making at a very early stage of one’s life is concerned. Margin of error is so little that a few wrong moves can turn one’s financial life into a living nightmare.
At one’s youth is someone most susceptible to making mistakes in financial decisions, as this is the time when one gets to handle some real money as well as gets exposed to the financial world for the very first time. While the safest and most sensible approach is to minimize the unnecessary expenses and to save and invest as much as possible out of the money at hand, in reality, youths end up making various money mistakes that can be categorized as reckless, emotional and casual, in their order of significance.
Reckless Money Mistakes
Most reckless money mistakes of youths are pertinent to their unbridled spending on goods and activities that add little value to their life, but only plunge them into debts, and availability of credit cards only worsens the matter. Besides, skipping credit card payments and denting their credit scores add to these mistakes which can be rectified by consolidating all the loans, making beforehand arrangements for timely payments and also keeping up with the credit scores.
Other reckless mistakes that youths tend to make are giving up a secured career in search of ones that excite them, without realizing if they pay the bills or not, and not carrying a health insurance. Life can be much easier if such reckless mistakes are avoided with a little sense of sensibility and rationality.
Emotional Money Mistakes
Emotions at youth tend to be at their peak, because of which mistakes are made that people at other stages of their life, don’t usually make. Examples can be buying a house with whatever the money they have at hand, pursuing a grad school degree unnecessarily, rushing to pay off student loan debts, taking loans for wedding expenses etc. All the afore mentioned money-decisions are considered mistakes only at youth, not at later stages of life, because these are nothing but luxuries at this stage of life which is actually the time to save and invest as much as possible out of their very limited money.
Casual Money Mistakes
As the name suggests, these money mistakes can be avoided through a little more cautious planning that prevents further building up of their personal debts and makes way for paying them off quickly. Not budgeting the probable expenses as well as postponing savings for retirements can be considered as some of the major casual mistakes made at youth that can have serious impact on the future financial life. But one more casual mistake that is often ignored is being so dependent on parents so early in life that it becomes difficult for oneself to become self-reliant.
So the bottom line is, playing around with money, at youth or more precisely at the early twenties of one’s life, is not discouraged at all, but risks taken will have to be well calculated and most common money mistakes should be avoided, let alone be repeated.