Young age is when people make the biggest mistakes in their life and career. From mismanagement of their hard-earned money and their credit cards to failing their future plan, young adults make a lot of money mistakes.
Here are the biggest money mistakes people make in young age and how you can avoid them.
Biggest Money Mistakes People Make in Young Age
#1. They Don’t Invest When Young
That $500 per month car payment could have been invested in the stock market gaining a historical average of 10-12% per year meaning that if you started investing this money at 20, you’d have over $6.1 million by the time you retire if you retire at 70 at investing $500 per month.
Time is money, if you start at 30, you’d only have just over $2.3 million when you retire, the power of compound interest. BIG Difference. So, start young when you invest. The younger, the earlier, the better.
So, if you start young enough, you are more likely to become a millionaire or even more when you retire.
#2. They Don’t Create Assets
Statistically speaking, the wealthier someone is, the more likely they gained their wealth through creating some kind of asset or investing in income-producing assets. Things like this include:
- Starting a Company
- Investing in Real Estate
- Investing in Stocks
- Creating an Online Business
- Investing in Yourself
When you work for somebody, the business owner profits off of you selling your labor which translates into creating a bigger asset for them. Unfortunately for the worker, the money you get paid for your labor is much less than the money you help add to the asset (company) you work for.
For example, you are making $12 per hour. Your CEO might be making something like $120 per hour or whatever.
So, learn to invest in yourself to allow yourself to become in a position where you can create your own asset. You can create your asset just by investing in real estate with little money or starting a small online business. Everyone starts somewhere.
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#3. They Don’t Take Risks
Had you invested $100 into bitcoin when it was $1, it would have landed you 100 bitcoins today. That value as of today would have been equal to over $3 million. Now, imagine investing when bitcoin was even much less than $1.
Or, putting money into amazon when it was $10 a share and now it is over $3000 per share? That is 300x your investment.
So, if you are young, take a percentage of your income and invest it in calculated risk things by doing full research. Don’t just pick any random things. Pick something you have a firm idea and knowledge that can change the industry or whatever it is in. Don’t be scared about people badmouthing it, I mean who cares? Some People did the same about amazon before it took off.
So yes, learn to take risks. It could pay off at an exponential amount. Enough to turn $100 into a million or more possibly.
#4. They Have Too Much Credit Card Debt
One common mistake many young adults make is getting in over their heads with credit card debt. Credit is appealing because it allows you to buy items that you may not be able to afford otherwise. These purchases may be unnecessary and often end up costing more than the original purchase price.
Even though buying something on credit may seem like a good idea, remember that this is not free money. If you carry balances on credit cards, you pay the credit card companies to borrow this money in monthly interest payments. So, if you do charge a purchase on a credit card, attempt to pay the balance in full each month.
Pay as much as you can if you are unable to pay your balance in full. Only paying the minimum amount due each month will not help you get out of credit card debt. As a matter of fact, only paying the minimum amount may cause you to be in debt for longer than you would like.
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The Bottom Line
Time is money. The younger you are, the easier it is to reach your goals, so use your time effectively. The best way to gain wealth is to look at some of the biggest mistakes people make and avoid those at all costs. Research and Learn More about the Biggest Money Mistakes People Make in Young Age so that you exempt yourself from unnecessary hurdles.
Tip: Always put your money where it is most likely to grow.
