We would all like to know how we should prepare for the challenges and stages of life before they happen. However, we learn from our mistakes with each experience we live, hence the knowledge and maturity. But who would not like to gain wisdom without having to constantly stumble on the stones of the road?
And although it is impossible to skip all the obstacles that will be faced, you can always learn from the mistakes and teachings of others. We should only be aware of what is happening around us. Learning from one’s mistakes so as not to make them again is very good, but learning from the mistakes of others so as not to make them is twice as good.
The twenties are the best stages in life. You finished college and you start working, you have your own income and not many responsibilities. There are no children, no wife or husband, no significant health problems. It is said that when you are in your twenties you can experience different paths to find what you are passionate about without taking the work or personal world so seriously.
However, if you are not careful with the responsibilities and freedoms you have, you can make mistakes that will have a negative impact on your future, that is, in your 30’s and 40’s. Therefore, Finerio tells you the mistakes you should avoid in the financial field of your life and that you are surely already making. Don’t say no, accept it and start learning from the teachings we give you.
- Not have a budget
The most important point and almost nobody pays attention: the budget. It doesn’t matter how much you earn, but how you distribute and use your money. A person with high income may have bad finances and be heavily indebted. A person with average income who has good finances is because he has financial planning.
To create a personal budget it is necessary that you write down all your income (what you earn, what you get, what you find) and all your expenses (exits, chips, your dog’s food) of the month. Based on that you will realize how much your total expenditure is and how much monthly budget you can allocate to each category (home, transportation, food, health, entertainment, etc.). Once you’re aware of that, you’ll know the sum you can really start saving month by month.
The key to having a good budget is not to exceed the limit you assign to each of the categories, and for that you need discipline, to record your expenses daily and not to spend more
- Do not save
“Don’t save what you have left after spending. Spend what you have left after saving. ” Most young people hardly save, or have little control over their savings. Just as money comes, it goes. Do not get carried away by the excitement of the moment and ask yourself if the expenses you are about to make are really necessary: clothes, beers, snacks, travel, car, cell phone.
Why save? Most people save for short-term personal goals: buy something or go on a trip. However, when you start saving it is essential to start with two things: a) A savings fund for emergencies and b) A savings fund for retirement.
The emergency savings fund is crucial in case you lose your source of income or have an accident. This fund should cover your expenses for 3 to 6 months. That is, if your monthly expenses are 6,000 pesos, your savings fund should go from 18,000 to 36,000 pesos.
Put a certain percentage of your income on savings. There is no strict rule to save, if you set your mind you can save up to 50% of your income.
- Spend a lot of money socializing
Almost all young people are victims of spending money on banal things: restaurants, parties, outings with friends, with the bride or groom, gifts, concerts, trips, etc. It is not bad to spend in pleasant moments, but if this happens very often it means that you are probably not saving, or you could save more than you think; In addition to that you have based your happiness and your free time on activities that revolve around money. If you try other types of activities you will see that happiness can be achieved without spending too much.
- Have no credit history
Many people have the misconception that having a credit card or asking for credit is a very bad thing that only indebts you. That is not like that. When people process a credit card or ask for personal credit, they begin to form a credit history reflecting their debtor behavior. If you always pay on time and make full payments you have nothing to worry about. The credit history is in the Credit Bureau, which is the institution that collects that financial information. And no, being in the Credit Bureau is not bad either! The most normal thing in the world.
Why is it important to have a credit history? Building a credit history from an early age will help you in the future when you want to take out a loan for a house, for a car or for your business. The financial institutions when seeing your history will realize that you are old and will rely more on lending you, likewise if your rating is good, they will grant you better conditions and interest rates.
5. Do not pay your credit card on time
There are banks that are flexible by granting credit cards to university students or recent graduates, which is a fantastic opportunity for you to start creating your credit history. However, if you do not pay your card on time or only make minimum payments you will begin to drag debts with the bank that will eventually become nightmares that will take your sleep away. It is best that you always be a total zero (make full payments) and do it on time.
Remember that a credit card is not “extra money” that you can have month after month, it is money that, after all, you will end up paying. Credit cards are recommended because they can be used for emergencies or because they offer different benefits.
6. Debt you
The worst mistake you can have in your twenties is to start borrowing and not strive to get out of those debts. Debt is a bad habit that will end up consuming and wearing you out. Hence the importance of a budget, because you will avoid spending money that you don’t have.
7. Don’t educate yourself financially
If we live in a system that moves through money, the most prudent thing would be to learn how this works in order to use it in our favor. In our country, financial education is almost nil; However, that does not mean that we have to go blank.
Surely when you have gone to the bank, when you have heard of investments, loans and personal finances you have been left with a “what” face, and you even feel that you are seen as a fool. It is a fact that you need to know certain financial terms so that you understand what they are talking about when you want to take out your credit card or want to hire a financial service. You will see that it is nothing of the other world if you begin to investigate little by little.
Spend about 2 hours a week to educate yourself financially. Subscribe to our blog and learn about personal finance,
8. Do not invest
The last mistake you can make, but not the least important is not to invest your money. To invest? That’s right, it sounds complex, but it isn’t. Now there are several investment platforms that are online and with which you can start from 100 pesos.
Investing is essential so that your money does not lose value over time, that is, with inflation. Now it is no longer useful to save and leave your money under the mattress or in a bank account that does not generate returns, because that money in a few years will be worth less than it is worth today.
And if you don’t convince yourself, we tell you the best reason for you to start investing: generate income without having to work.
Now you know the mistakes you should start to avoid, and that surely you were already making. But, remember that if you learn from these teachings and apply them, in a few years you will no longer have to stumble upon those stones. You will learn these teachings in one way or another, but better be for the good. What do you think? Would you add anything else?