Updated: Aug 13, 2022
As older Gen-Z and young millennials navigating a fiscally complex world (we're talking about you, gas prices and NFTs!) the world of finance can seem daunting.
Sure, we want to “live our best lives” now but there's also the urge to be responsible with our earnings.
The good news is we have a blueprint on what NOT to do based on the experiences of older generations. And sure, times are different but there are a few things that stay the same. By avoiding these financial mistakes that are typical for most 20-year-olds you can begin to build the foundation for long-term financial stability.
Avoid Selling Property
Generational wealth is a hot topic. But many don’t realize they’re sleeping on a gold mine. Though this may not apply to everyone, consider this advice if you fall into this category.
Some children will inherit land after their parents pass away. It may not be a large property in terms of acres but please know, land of any size is gold!
Land is one of the few assets which appreciate in value! Many persons make the mistake of selling land when they fall on hard times or put it up for collateral for investments they aren’t sure about.
Whatever you do, do not sell your land.
I can assure you that a wealthy person will attempt to undervalue your property and buy it for a fraction of what it’s really worth.
Resist this temptation.
When you or your offspring are in a better financial place, your land can be used to create sustainable and profitable income properties. Duplexes are a great way to continue living on your land mortgage-free! But, duplexes and income properties are a whole other topic for another post.
Other assets that do not lose value or are slow to depreciate are gold jewelry and art. Also, if you have an old typewriter or rotary dial telephone, do not sell or discard them. Twenty years from now, they can be auctioned off for thousands of dollars. Old chinaware and pottery, as well as coal pots, also fall into this category. A good rule of thumb, if you cannot find it anywhere else online, DO NOT SELL!
Investments… For Beginners
No matter how small, investments you make now will pay off in the long run. You’re a far cry away from retirement. Time is literally on your side.
Though the yield is slow, speak to a bank representative about CD’s. A CD is a savings account that yields higher interest rates than your typical savings account. However, you must leave the deposit alone for a substantial period without withdrawals.
This is a good way to get your foot in the door for investments. Some other ways to begin investing is through apps such as WeBull and Acorns. Once you’re comfortable with these, you can start looking into more profitable means of growing cash.
NB These are investment options for beginners. There are more profitable (and riskier) ways to invest.
High-Interest Credit Cards
No matter how tempting, high-interest credit cards ALWAYS end up hindering your financial journey. So, avoid them at all costs. That’s it. No fancy language or witty explanations. Just don’t do it.
But if you did bite the bullet, just remember, slow and steady wins the race.
Halt all automatic purchases on your card and commit to paying a little over the minimum payment each month.
Getting Caught Up In Not Having A Savings
I know, I know. We’re frequently taught how important having a savings is. Yet, many millennials do not have 10% of their salary, or 6 months worth of income saved up to assist them when times get tough.
However, do not make the mistake of losing sleep over the lack of a savings balance. The truth is, many persons are not in a position to save what is required. Persons who write blogs on savings take for granted that people are doing what they can with what they have. Not every one is honest about their financial situation.
It’s important to be gentle with yourself. Do not focus on the amount you are saving, focus on consistently saving what you can. That may be 3% to 5% of your income, and for many persons, that really isn’t much. But, rest assured, you’ll eventually get a handle on your income and expenses by employing side hustles and minimizing debt and expenses. When you do, you will be able to save a substantial amount.
For now, the goal is to get into the habit of treating your savings just like taxes or tithe. That way, when you do have a better financial footing, saving will come naturally to you.
Not Having A Budget
Budgets sound scary, I know. They don’t have to be. Open up a simple excel sheet. Type in your gross income. Under your gross income, type in your expenses from highest to lowest. Total your expenses. Subtract the total expenses from the income then, voila. You’ve just created a simple budget.
NB Take it a step further by leaving the money for your expenses in a separate bank than your savings account. Yup, it makes a difference!
I know some may have more complex budgets, but if you’re a newbie to money management, all you need is a visual idea of what you have, and what you don’t have. This sets the foundation for more complex money tasks like taxes, investing and savings.
I hope this article proves helpful to some 20-something-year-old out there. Adulting is hard! But guess what? You GOT this!