Many believe that young people are not meticulous when it comes to their finances, SIMON EJEMBI writes
Many young people do not bother
about proper financial planning until they become older. Experts say
young adults, especially people in their 20s often feel there are too
young to think about owning their own homes or ‘major’ financial
projects. As a result, they wait until much later in life. By the time
they are ready to get their finances in shape, experts say they would
have made several financial mistakes that are capable of making the
journey to financial freedom an arduous one for them.
Choosing liabilities over assets
According to experts, this is one of the
most common mistakes young adults make. They explain that they have a
tendency to chase trend and to obtain the latest gadgets and the likes,
regardless of whether they need the items or not; whether they will
achieve financial growth by obtaining them or not. Experts, however,
warn that many of these objects, being liabilities, cannot help users to
grow their assets.
Ignoring discounts
To some young people, buying on discount
makes you cheap. Some even avoid outlets advertising discount
offerings; they don’t want to be seen as cheap. But experts say while
peer pressure has led many young adults to consider discounts as an
option for poor or ‘cheap’ people, those who take advantage of discounts
are in reality financially smart.
According to them, virtually all
year-long, there are retail outlets, hotels, schools, banks, etc.,
offering discounts and young people, stand a great chance of boosting
their finances by getting goods and services from such outfits. If your
profession requires you to fly regularly, you could approach the airline
you patronise and ask for a special deal. The same goes to businessmen
or sales professionals who spend hours on the phone; there is no harm in
making arrangement with the phone company for lower tariff.
Renting expensive apartments
The goal of money management is
financial freedom and independence; a situation where you can take care
of your needs and live comfortably. The ‘challenge’ is that you have to
make some sacrifices. According to experts, young adults find it
difficult to make these sacrifices, especially where their comfort is
concerned.
One area where this reflects, they
explain, is when it comes to renting houses or building one. According
to them, many young adults rent houses that are beyond their means. By
getting a place that is very expensive, you may find yourself without
money for some of your financial needs, which were supposed to boost
your chances of achieving financial freedom. This is because, not only
will you be paying a huge amount as rent, you will also have to cough up
a lot of money to maintain the home. Celebrities often make this
mistake. Little wonder when they hit a rough patch financially, their
homes are often put up for sale.
Failing to draw up budgets
Imagine trying to build a house without a
plan or leaving your house with no destination in mind. That’s what
experts say is like when people try to implement a financial plan
without a budget. The budget is meant to be a guide, a part of the plan
or foundation of that financial plan. The benefits of drawing up and
implementing budgets are numerous and AM Business looked at some of them
on Wednesday. Yet many people fail to make their expenses budget-based.
As a result, they cannot track their expenses and have no clue what
they spend their money on. Such people are likely to spend more than
they should, running into debt and ultimately financial ruin. Budgeting
is not just about saving money, it is about making you financially
responsible. And that is key to the attainment of financial freedom.
Not planning for emergencies
Young people are adventurous, often
taking risks in the belief that everything will work out fine. 150
kilometres per hour? Trust a young adult to consider it, ignoring the
possibility of a crash. Yes, they can. This applies in their finances.
Experts say many young adults to not bother to make plans for
emergencies. Some will use up their savings and even borrow cash to
finance the purchase of a car without thinking about maintenance,
insurance. Some do not even think they are capable of having a health
emergency. This sort of people are likely to say things like, “If not
for that accident, I was coasting financially.” In order to avoid such
outcomes, experts advise that people should have emergency funds. So,
apart from just saving for a car, wedding or marriage, it is important
to have and emergency fund. You never know.
Disregarding details
According to experts many young people
do not bother with vital financial details because they deem them too
little. Many young people do not scrutinise their bills or keep them.
They do not review them to know whether they are being shortchanged or
not. When they use financial services they do not bother about interest
or service charges. The truth is that by ignoring these details, they
are likely to, and often, lose thousands of naira – in SMS charges,
transfer charges, etc. If you spend N300 naira every day just to go and
purchase an item worth N200, you will be better off subscribing for the
item. Remember, that may even give you a discount.
Not taking care of their health
Many young people fail to realise that
their health can deteriorate over time. Experts say they assume that
they will remain strong and healthy. Consequently, as older people avoid
the rain and the sun, as they go for regular checkups and go for health
insurance, young adults sustain risky behavior health-wise. This leads
to health problems and loss of huge sums of money on treatment or
medication.
Paying avoidable fees
There are many costs experts say people
should avoid paying. These fees include excess baggage charges when
travelling by air, traffic tickets, and late registration charges and so
on. Yet, experts say young people are notorious for ignoring such
advice and paying these fees. Over time, they amount to hundreds of
thousands, gone down the drain.
Planning just for today
Have plans to eventually own your own
place, go to graduate school or travel the world? You may think planning
for the future is only for people thinking about retirement, but
everyone can benefit from financial advice. Speaking to a financial
advisor or financial services manager can help you figure out what you
need to do to afford your dreams. Also, don’t forget to check in when
major life changes occur, as your financial priorities will probably
shift too.
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