Making mistakes is part of life but there are some mistakes that you cannot
afford to make especially in your 20s luckily boss in
this video i will be sharing seven money mistakes you must avoid in
your 20s and if you're new to the channel then
hit the subscribe button below for more life-changing content mistake number one
relying on your parents for all your financial advice
the first money mistake you must avoid in your 20s is relying on your parents
for all your financial advice you have to understand that your parents are not
financial experts and some of their advice could be wrong
some of the bad money habits that you have today
are most likely from your parents and the environment you grew up in
therefore if you want to make better financial decisions you have to change
your habits and stop taking every money tip that
your parents give you to heart let me give you some very practical
examples of how most parents think about money
and why you should stop relying on them for your financial advice
some parents think that investing in the stock market is gambling
especially those who might have witnessed some stock market crashes
and seen all their wealth vanish within a short time
another reason why you should not rely on your parents for all your financial
advice it's that some of them think that
insurance is a waste of money and if you have ever thought of
insurance is paying money for nothing then it may be because your parents
think the same way too some parents wonder why you should have
health insurance if you're not sick more often than not relying on parents
for financial advice is not the advisable move
in fact studies show that many older people have no idea how to plan for
their retirement or manage their 401k account that being
said are these the type of people you want
advising you on how to use your hard earned money
mistake number two ignoring alternate career paths
another money mistake that you must avoid in your 20s is ignoring an
alternate career path gone are the days when people can stay in a particular job
for life things are changing now and there are
times when it becomes inevitable for you to consider an alternate career path
as technology continues to advance some jobs are becoming obsolete and new
careers are emerging your 20s is the best time to see what
jobs interest you the most and allow you to chase new trends
while your financial obligations are minimal meanwhile
it is okay if you were in your 20s and you don't know what you want to do with
the rest of your life for most people this is the decade to
explore learn and make important decisions about their careers
however some signs exist that will help you realize you should start looking
into other career paths for example you may
begin to feel disconnected from your current job or lack the enthusiasm you
once had alternatively you may hate going to work
but keep the job simply because it pays the bills
if any of these red flags resonate with you then you should consider
an alternate career path now that you know that you must not ignore an
alternate career path you need to know how to go about it the
first step is to identify what you want start by asking yourself some questions
what is your passion what do you like doing most what are
your skills these questions will help you identify
what you want and the skills needed for it you may have to learn some of these
skills and it may require that you go back to
college or university to acquire another degree
or perhaps the next job or role you want requires you to become an apprentice the
means of learning doesn't matter what does is that you get the training
needed to be successful at the next job you aim to land mistake
number three focusing on saving and not investing
your twenties is the best time to start investing however most people in their
20s make the mistake of focusing on saving and not investing
saving money is good but it may not be the best strategy to build wealth
the interest rate that most financial institutions will give you is barely up
to the rate of inflation what this means is that you may end up
losing money in the long run by saving because the purchasing power might have
reduced for instance think of the things that
one dollar could purchase 10 years ago and compare it with the prices today do
you notice any difference when trying to keep up with inflation
investing is a better option when compared to saving
most people prefer to save money because they don't know the benefits of
investing investing has higher returns than saving
and this means that your money will not lose its purchasing power
investing is also an excellent way to grow wealth for instance
the annual average return of investing in the s p 500 index has been above 10
percent apart from building wealth investing
your money is a way to make money work for you while you do other
things that is investing is a source of passive income because some investments
such as stocks and bonds pay dividends and interest to shareholders now don't
get me wrong saving money is important it's important
because you need to save to invest you may even find it difficult to invest
if you do not have savings to fall back on
in case of an emergency this is why i always recommend you have three to six
months of your monthly expenses saved in an emergency fund
but these are just a couple reasons why investing early is crucial
so continue watching this video as i show you more reasons why you need to
start investing in your 20s mistake number four failing
to understand the power of compound interest
albert einstein once said compound interest is the eighth wonder of the
world he understands it earns it hugh doesn't
pays it he said this because he understood the
power of compound interest one mistake that you must not make in
your 20s is failing to understand the power of compounded interest
i will explain to you the power of compound interest by using the following
example let's assume you invested 100 in an
asset with a 10 interest rate per annum at the end of the year you would receive
interest of 10 making the total value of your
investment 110 dollars if you leave this amount for another
year you would receive interest of eleven dollars instead of ten dollars
making a total of 121 dollars that's how compound
interest works it's interest growing on top of interest
and it's an excellent way to grow your wealth
exponentially furthermore some factors that influence compound
interest include the amount invested the interest rate and time time is one
of the most important factors because someone who invested
less may make more money if they started investing earlier
if someone invested a hundred dollars every month at 10 from age 20
and stopped investing when they were 40 they would have a total of 1.2 million
dollars at age 70. if another person started investing the
same 100 per month at 10 from age 30 and invested until
they hit age 70 they would only have 535 000
in short the earlier you start investing the more money you are going to make
if you're watching this right now you need to leverage compound interest
if you have yet to start your investing journey
mistake number five undervaluing yourself on the job market
another mistake that you must avoid in your 20s is undervaluing yourself on the
job market one of the myths of getting a job that
people believe is that you must lower your salary expectation to increase your
chances of getting a job while this may seem like a clever means
of getting a job you must not make this mistake
if you eventually get a job by undervaluing yourself you may become
frustrated at how little money you're making
feeling disenfranchised your work quality may start to decline
which in the worst case scenario will see you losing your job
therefore learn to set realistic goals and don't take an offer that you may
later regret before you apply for a job do your research to understand what
others with similar experiences and skills earn as a salary
if you don't know the answer to this you can analyze your skills and determine
how much your skills could contribute to the organization you want to work
with this will help guide your application and negotiation process
a quick tip i'd like to pass along to my younger peers is to never stop learning
the more you increase your knowledge the more your value will increase
learn a new skill improve an existing skill if possible or learn
a new language increase your network both offline and online and finally
don't be afraid to refuse an offer that is less than what you deserve
mistake number six maintaining a high credit utilization rate
you must not make the mistake of maintaining a high credit utilization
rate and hurting your credit score when
you're in your 20s or at any age for that matter
if you're unfamiliar with this term your credit utilization rate
is how much debt you owe divided by your credit limit
in other words if your credit limit is five thousand dollars and you have a
credit card debt at 2 500 your credit utilization rate is 50
credit is the measure of credit risk usually
for consumer calculated from credit information using a
standardized formula it is the number that lenders use to
predict how likely it is that you're going to pay back your loan on time
and in full one of the reasons why it is important to have a low credit
utilization rate is because it is the main driver in
calculating your credit score making up 30 percent of the total
calculation a lower credit utilization rate means that you are using
less of your credit available this will reflect in your credit score and lenders
would assume that you are good at managing your credit
by not overspending and may consider you for a loan and
this can even lead to preferable interest rates when you decide to borrow
another benefit of maintaining a good credit utilization rate
is that it can influence how much a lender is willing to lend you
this is especially important when you're looking to get a mortgage as
interest over the course of this loan can cost hundreds of thousands of
dollars therefore keep your credit utilization
rate as low as possible the recommended credit utilization rate
is 30 so use this as your benchmark mistake
number seven being too timid to negotiate your
routine expenses the last mistake in this video that you
must avoid in your 20s is being too timid to negotiate your routine expenses
most people find it difficult to negotiate anything including their
routine expenses routine expenses include your phone bill
electricity bill cable bills etc one of the ways to
overcome this is by comparing the benefits and negotiating your routine
bills and the worst possible outcome of doing
so which is likely just being told no in many circumstances you can negotiate
down to a lower monthly bill as creditors generally will want to keep
your business if they can't lower your bill then they
may be able to add in other features instead which still leaves you
better off than you were before negotiating your expenses will also make
you feel good about yourself and can increase your self-confidence
the worst thing that can happen if you negotiate your routine expenses
is that you can get a no for an answer thinking of the several benefits may
motivate you and help you overcome your fear of
negotiating as you've seen in this video some financial mistakes can be very
costly hence you must do everything possible to avoid
them thanks for watching if you want to go
from the life you have to the life you deserve
then hit the subscribe button now