financial education

10 financial education mistakes young people do

For a long time I wanted to write this article and I hardly refrained myself from doing it. I hear daily too many stories about money from friends / acquaintances even if I do not agree with them.

I am part of the young people’s category and I am very glad. I want to enjoy this age as much as I can, but I will never neglect the financial part, because regardless if I want it or not, it will always influence my life.

Many decisions we make now will influence us when we will be 40-50 years old, this is why it is good to care about our money and to try to control them.

If you are young, read carefully the rows below. If you have passed the young age, read the article and forward it. Help those around you manage their money better.

Let’s start the list…

10 financial education mistakes young people do

They have reached a pretty good wage and started to accumulate debts.

Yes, those with small wages seem more prudent and take a better care of their own money. They are those who will get by with less money and will not make many mistakes with the money because they do not have many.

The problem occurs in case of those who started to win more: 2-3-4 thousand lei per month and their worries regarding the financial status are already gone. They start buying apartments for 30 years because yes of course they will get by, they start to buy good cars, latest generation phones, designer clothing and so on because they “can afford it”.

They are the type of person who, if they earn 2000 lei per month, they will spend 2000 lei the next month. They are not thinking at all about the future and not even a second about the fact that all the loans they took are supported by a job which can disappear quite easy.

financial edu

Financial planning (personal budget) is a funny notion.

Let’s not talk about budgets because we are already entering into some complicated things. Budget = a mathematical things which will take up my entire time, plus I am too lazy to fill it in all the time.

Exactly, here is where we go into issues like: we are spending too much in the city, we are eating too much out, we accumulate debts, we buy everything cool and we do not care about tomorrow.

We are always sure that tomorrow will be a better day. (Many times this is not true) – Emergency fund = 0 lei.

When we are young we know (100%) that everything will be always ok. We have a good immune system, we think we are full of energy and we do what we want.

But many times, it happens that very difficult experiences hit us, which can be solved with money: someone in our family has a problem, our car breaks down, you have a problem and you need doctors and many others and here comes your capacity to get money.

Of course, the emergency fund is something taboo for young people and it is not taken into consideration at all. We are never thinking about less pleasant events because life is pink.

Unfortunately, life is not always pink and an emergency fund could be an extremely good solution for unpleasant events in your life.

We support ourselves from a single income source.

Wage/parents (as the case may be) = single income source. Most are living in a bubble where everyone is happy with his/her income and does nothing besides job to live better.

In the happiest case, we change our job for a better wage or for an easier working environment, but we are not thinking at all at other possibilities.

Passive income is only for the big ones and cannot be accessed by all.

If the income source falls, God help us go over it easier, but we are not doing anything beforehand.

Over 30 years = a beautiful house.

House = the only investment we have learnt from our parents. I have nothing against this type of investment, I do have something against those who barely have a wage of 1500-2000 lei net and they already took a 30 years loan because “I NEED AN APARTMENT”.

No, you do not need it, but the education you received taught you that. We must have our apartment, ours. Just so you know, if you buy it on a loan basis, it will not be yours until you return the entire loan.

Recommendation: If you are buying an apartment/a house, try to pay it in 7-10 years. Save as much money as you can since the beginning, pay a higher advance, try to earn more, pay your instalments early.

Economic crises are cyclic, you can never know when they strike and LOAN + REAL ESTATE = KNOCKOUT!

“Financial education books are for single women…” – a comment to one of my posts from a young man.

Firstly, I was shocked when I heard this. He is already born with a financial education, but I do not know where this idea came from, that single women are those who are in need of financial education and these books are meant only for them.

Secondly, I believe that this type of books (more professional) can help us most in life.

Yes, we will find out information that fits only for America, but the idea is to transpose everything in our Romanian environment. Financial education books can be a start for your friendship with money.

You will find in there concepts (maybe many of them theoretical), but it all depends on you if you implement them or not.

Unfortunately, young people do not read financial education books because it is not COOL. They are boring and they do not want to fill their minds with “stupid stuff”.

But these young people will reach and age of 35-40 years old or more and they will say “I WAS SUCH A FOOL FOR NOT TAKING MORE CARE ABOUT MY MONEY, MAYBE NOW I WOULD HAVE HAD MORE”.

Investments on the stock market are not for me. It is too much to learn.

financial edu

Unfortunately, investments on the stock market are still branded as being very complicated and only the smart people can access them.

Yet this is not true at all. Anyone can really invest if one has A LITTLE TIME and is INTERESTED to learn.

Yes, you cannot invest if you know nothing. But everything in this world can be learnt. You can learn how to invest your money on the stock market and you can make a passive income source out of it.

Car = the best investment.

I think it is pointless to tell you that a car IS NOT AN INVESTMENT. It is a whim for many young people and many of them want the most expensive one.

Their behaviour is consumption – oriented, instead of being earnings – oriented.

Yes, we are much happier when we buy certain goods than when we earn money. Unfortunately, this is a truth that applies for many people and we can hardly see it.

A wage or any other earnings, when they come, it seems normal, but when we buy a pair of shoes, it is then when we seem happier. Maybe we do not even need them, but we are happier.

What it would be like to change that and be super happy each time when we earn money.

If you talk about money / financial education with your friends, they will laugh at you.

Hmm, I think this is the saddest. To be young, to have not even the slightest idea on how to manage your money, but to laugh at those around you who started to learn more about investments, to read books from this area or to create an emergency fund.

I would advise these young people, who are always laughing at those who want to evolve, never to go to my blog. I want 100 people interested in this area more than 10,000 people who always laugh at this concept and who will cry when they are of old age because they did not learn about it when they were young.

With these being said, I hope you memorized at least some little things among the above mentioned. You can read it again to realize these mistakes once more and you can even send it to your friends.

Many times, the change comes once the environment changes. Be yourself the one who teaches those around you.

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