In this article, we will list the 7 biggest financial mistakes that young adults make. We began our piece by discussing the financial advisory service market and credit card and student loan debt in the US. If you want to read this discussion, visit 20 Biggest Financial Mistakes That Young Adults Make.
7 – Not Saving Enough
Insider Monkey Score – 4
Not saving enough or not saving at all is 7th on our list of the biggest financial mistakes that young adults make. Having an inadequate saving leaves an individual vulnerable to financial insecurity in the future.
6 – Taking Out Student Loan for Unpromising Degrees
Insider Monkey Score – 4
Taking out student loans can potentially be detrimental to an individual’s overall finances, especially if taken for a degree that might not be helpful in a lucrative career. If the degree in question has the potential to improve the financial circumstances of an individual and enable them to comfortably pack back the loan, then it is a wise decision. However, many students take out student loans for degrees, which might not give an adequate financial return, and they struggle to pay back their loans in the future.
5 – Eating Out Frequently
Insider Monkey Score – 5
Eating out every once in a while can be important for several reasons. However, eating out frequently can be costly when the same meal can be prepared at home for a fraction of the price. Dining out frequently can lead to significant expenses that add up over time. These funds could be allocated toward more important financial goals such as savings for emergencies and making major purchases.
4 – Unplanned Mortgages and House Loans
Insider Monkey Score – 5
One Reddit user notes that not understanding mortgages enough was the biggest financial mistake they made when they were young adults. Mortgages and house loans typically last for decades and locking yourself into continuous monthly payments for so long requires considerable planning.
3 – Not Investing Enough
Insider Monkey Score – 8
Not investing enough is one of the 3 biggest financial mistakes that young adults make. By not investing in younger years, individuals miss out on the opportunity for money to grow over time through compounding returns. Investing early allows people to take advantage of the power of compounding.
2 – Spending Too Much On a Car
Insider Monkey Score – 13
Spending too much on a car is second on our list of the 20 biggest financial mistakes that young adults make. Many Reddit users note that they unnecessarily bought a car they could not afford right out of college when they could have saved up for a used one and utilized the monthly payments on investments.
1 – Accumulating Credit Card Debt
Insider Monkey Score – 17
The most recurrent theme in online discussions related to the biggest financial mistakes that young adults make is accumulating credit card debt.
Many users note that one of the greatest mistakes they made as young adults was to think of their credit card limit as the money they own and have to spend. They also note that with their credit card, they spent more and were less careful about what they purchased.
Credit cards often come with high interest rates, and accumulating debt increases the likelihood of carrying a balance from month to month. Accumulating credit card debt often results in a cycle of debt repayment that consumes a significant portion of one’s income.
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