Having regrets is a normal part of life. Maybe you regret not talking to your crush in 9th grade or not going to prom. Everyone will have some regrets in life, but when it comes to money, there are some regrets you never want to have to face.
There are certain money mistakes that, when made, especially in your youth, can make it nearly impossible to succeed financially; therefore, you must make sure to avoid the following 10 mistakes!
Mistake #1: Thinking College Will Make You Rich
If you’re like the average American teenager, then your life path has already been set for you. You’ll be expected to get good grades in high school to be able to attend a good college; you’ll work for 40 years (but likely more), and then you’ll retire. And, hopefully, during this time, you will have enough money to buy a home and go on a couple of vacations.
The sad reality is that most young adults don’t realize that college truly isn’t a path that will reliably make you rich, and to be honest, having this perspective probably isn’t their fault.
In fact, we should blame society for this. You see, your education actually begins the day you leave school. You may not like to hear this, but it’s the truth. The real world is very different from the four walls of a classroom.
Truly successful people are people who learn every day, even two decades after they’ve left school. They know that simply getting the education that college provides will only offer them the ability to work a routine job that will never pay them enough to get rich. Rich people realize early on that they need skills beyond what they learn in school if they want to get ahead financially.
Unfortunately, most people stop learning the day they leave school, and that’s a big mistake that leads to poverty and an unfulfilled life. Read good books. Listen to a good audio program. School doesn’t teach you as many worthwhile things as you’d like to believe.
Mistake #2: Not Doing Your Own Research
Young people are those who will sculpt and shape the future world we live in. They are people with great minds who are full of opinions, but they will rarely challenge what they hear from their elders. For instance, they take money-making advice from their parents who have never earned a six-figure income, or they take business advice from those who have never run a business that turned an annual profit.
Your early years should be a time of learning, but also of questioning what you are told and even getting deeper into your own best thoughts and points of view. Experience may lead you to discover that issues that seem black and white are actually many shades of gray.
With age doesn’t necessarily come wisdom, and many young people too easily accept what they hear from older generations. Following your instincts can take you a long way if you know how to follow them well.
Mistake #3: Spending Unnecessarily
When you’re young, your main priority is having as much fun as possible. And let’s call it what it is: having fun often costs money. Whether it’s going out to the bar with your friend or going on vacation, money is almost always involved.
And I think that it’s good to live it up, especially when you’re young and have the time and energy to be adventurous, but where the youth, and most people in general, go wrong is by behaving this way on an ongoing basis.
Many people feel a constant need to live like the people they see on social media—those who drive fancy cars, wear expensive clothing, and live a life that is unattainable for 99% of people.
Young people try hard to get the same things that their role models have, like the newest phones or gadgets, so they can be like them. However, this only makes them poorer than they already are.
As a young person, your primary assignment should be to build a solid financial foundation for your life. To do this, you have to have the habit of saving and learn about investing. You can buy everything and anything your heart desires, but that’s after you have built wealth.
I know this advice is unappealing to hear now, but it will be worth its weight in gold when you start to see your net worth exponentially rise in the future!
Mistake #4: Giving Up Too Easily
It is so easy to just quit when something feels too hard. It could be a tough college class, a significant other you’re in a relationship with, or starting your first business. The idea of giving up what you’re doing to just try something else can be the easier option sometimes.
Unfortunately, I am no stranger to giving up too easily. When I faced challenges in all of my early business ventures, like drop shipping and flipping books on Amazon, not seeing instant results prompted me to quit when, in reality, putting in more effort to learn and develop my skills likely would have given me the outcomes I was seeking to obtain.
Now, there are a few reasons why people give up. It might be that you don’t like what you are doing. But the biggest mistake you can make in most cases is to give up. Pushing through the hard times is what makes a stronger and more well-rounded person. When things start getting a little tough, don’t take the easy way out.
Keep on pushing through, and you just might surprise yourself. When you work through something tough and come out the other side, there is no better feeling. Don’t give up. Keep on fighting!
Mistake #5: Investing blindly
If you’ve been consuming proper financial advice, you will know that it is important to start investing early. Not to mention there are thousands of stories of people who have made millions investing in the stock market, which, as a young adult, can be enticing to emulate yourself. And it’s true, investing can be a very rewarding endeavor, but it’s not as easy as buying a few shares you think will do well and collecting your profits.
Whether you’re young or old, you must always do your research when making any type of investment. If you want to invest in the shares of a company, you need to learn to read financial statements, understand financial ratios, and at least have some knowledge about the business the company operates in.
The same goes with real estate. You must know the demographics of the area in which the property you want to buy exists, trends in rent and vacancies, and how changes in the interest rate can impact your investing decision. Simply put, you need to do your research before investing.
If you truly want to master investing, the best way to go about it is to study some really good books on the subject and talk to those who have invested successfully in the assets you are looking to obtain. This way, you can save yourself the heartache and disappointment that come with losing your hard-earned money.
Mistake #6: Needing Instant Gratification
If a young person wants to be successful, the thing that might hold them back the most is their need for instant gratification. Due to social media and the instant culture we live in, the youth are not willing to be patient to see their efforts through to the end and want the results they seek immediately.
Again, I struggled with this during my earlier business ventures, but once I focused on delaying my gratification, my life changed for the better. For instance, I committed to building up a YouTube channel, and by working on it every single day and being patient, I have built a nice income stream for myself.
Now, don’t get me wrong; I completely understand why people feel the need to get instant results. Young people today are under great pressure to establish a successful career as soon as possible, to find the perfect partner at the earliest opportunity, and, most importantly, to enjoy themselves right here and now. They always want everything NOW, and that usually leads them into unnecessary short cuts, debt, and an unhappy future chalk full of regrets.
Mistake #7: Not Saving Any Money for Retirement
A recent survey of 1,003 people from Bank Rate found that 69% of those ages 18 to 29 had no retirement savings at all. Your retirement may seem far off, but you’re doing yourself a major disservice if you don’t recognize the importance of saving as soon as possible.
Unfortunately, as I said earlier, young adults often feel immense pressure to fit in with their peers by buying the latest gadgets and the newest clothes. Each one of these purchases pushes them further and further away from retirement and is a result of what’s known as hyperbolic discounting. As humans, we are hard-wired to prefer short-term payoffs, even when we would get more by waiting.
Quite frankly, it’s hard to convince an 18-year-old that the $500 they invest now for retirement is better spent in this way than buying a phone that all their friends possess. However, these purchasing decisions will make you regret them down the line, which is why you should avoid this type of spending when you can!
Mistake #8: Not Preparing for Emergencies
When you’re young, you never envision anything going wrong. Maybe it’s because you haven’t experienced many tough times in life and you are full of energy every single day; however, the reality is that rainy days will come, whether that’s mentally, physically, or financially.
Not having the money to address unexpected events is something you want to avoid at all costs, and it is definitely a regret those who don’t invest in their emergency funds will face. As soon as you start making money, put 5% of what’s left over after taxes into an emergency fund. This way, you won’t have to feel bad about things that go wrong in the future.
Mistake #9: buying too much house
Buying your first home is one of the most exciting events in your life. However, it is probably the biggest financial outlay you will ever commit to, and many people overextend themselves and buy more house than they need or realistically can afford.
Don’t buy any home just to show off to your peers. Buy a home that works for you in terms of its size and cost. At the end of the day, you carry its financial burden, not your friends or family, so this should be a decision you make for your own ultimate benefit.
Mistake #10: Blaming Others for Your Lack of Success
When things go wrong in life, it’s easy to point the finger at others and direct blame their way, but in reality, you should be pointing the finger at yourself. Just because you went to party with your friends instead of studying doesn’t mean the C+ you got on your exam is because of them.
Just because you spent $100,000 on college because your parents forced you to go doesn’t make it solely their mistake. You are in charge of the choices you make in the end, and taking responsibility for your actions is important if you want to have fewer regrets as you get older.
This also works in a positive way as well. It entails choosing a career that you are interested in rather than one that your parents expect you to pursue.It means being okay with being selfish with your time when you are driving towards a goal. When you look in the mirror, you only have yourself to answer to at the end of the day, which is why you must blaze your own path and avoid blaming anyone but yourself!
All readers of Making a Millionaire can now sign up for our free Personal Finance 101 courses, which can be found here. This article is for informational purposes only. It should not be considered financial or legal advice. Not all the information will be accurate. Consult a financial professional before making any major financial decisions.