Most young adults, like the Millennials and Gen Y, are just starting out or are new to the workforce. While they may believe that they know what they want and how to get it, that is often not true. It takes time, experience, and research to understand the full scope of how life and finances work. There is a lot of trial and error that most individuals go through before getting it right, with few exceptions. One of the best ways to avoid the pain of the learning curve is to ask someone that has already been through it for help.
Starting a new full-time job can come with many benefits, depending on the career path you have chosen and the company you have taken a position with. Understanding a good employment opportunity and its potential benefit to your future and finances can help you to get started early on the path to success. Take a look below at some of the mistakes young people make when starting out so that you can be sure to avoid them going forward in your career.
When you’re just starting out, assuming you have time to invest in your retirement is a common mistake that most young adults make. There is no time like the present to start taking advantage of your savings and investment opportunities. Beginning early with an investment strategy means you have more time to maximize your return through compound interest. Would you like to retire at an early age, so that you can fully enjoy the financial freedom you have worked so hard to achieve? Then why wait? The longer you put off investing in your retirement, the longer you will need to work.
You may have dreams of becoming the next Bill Gates, but what if that doesn’t happen? If you don’t plan ahead, you could find yourself working past retirement age or even longer.
It’s not a matter of if, it’s a matter of when. Financial emergencies are unavoidable and will happen to you at some point. By creating an emergency fund, you can avoid going into debt the next time an unexpected expense comes your way. This also prevents you from tapping into your investments for emergency cash, which is a big investment no-no. While it may be difficult to start such a fund if you are trying to pay down student loans, remember that just putting aside a small amount consistently each month can go a long way. As little as five dollars a day or even $20 a month can create a nice stash of cash for the next emergency that arises.
After all the financial struggles you probably endured during your college years, finally having a few dollars in your pocket can be exciting. It’s your first full-time job making a decent salary, and you may be tempted to treat yourself to the finer things in life. You want to show that you made it. You finished school, you have a career, so why shouldn’t you have a nice car? There are many reasons this is a terrible investment. Paying off your student debt, personal loans and/or credit cards should be your first priority. While you may be tired of struggling, until you are free of debt, you shouldn’t add to that debt by purchasing a nice vehicle that will only depreciate.
If you have already fallen behind and need a little extra money to get ahead of your debt, then using a personal loan or an installment loan could be the right choice for you. The sooner you can get your financial situation under control, the sooner you can start investing in your future again.