In this article: The 20 biggest financial mistakes young people make. First, we discuss the U.S. financial advisory services market and credit card and student loan debt.If you would like to skip this discussion, please visit The 7 biggest financial mistakes young people make.
According to experts, by the age of 30, It has been saved Same amount as your annual income. For some, this goal is achievable. However, for those who make Financial mistakes as a young persons, it gets more and more difficult.
Individuals and businesses must practice healthy activities at every step financial decisions And avoid financial mistakes as much as possible. This is why the financial advisory services market is expected to grow at a rate of 5.3% over the forecast period from 2022 to 2032. It was valued at $94.8 billion in 2022 and is expected to reach $157.7 billion by 2032. Companies and individuals in this industry believe: Financial services and advice for small businesses and high net worth individuals.Also, more and more people are looking for alternative investmentsso financial literacy It's becoming quite important.
Companies in the financial services market are some of the largest in the United States. Morgan Stanley (NYSE:M.S.). The company is an investment banking and financial services company that also offers discretionary investment options to its clients. Morgan Stanley (NYSE: MS) had revenue of $54 billion in the past year ending September 30th. In the final quarter of this year, Morgan Stanley (NYSE:MS) reported a revenue increase of $13.27 billion.
The United States is a financial center with the largest GDP in the world. However, many people in this country still lack financial literacy, and the signs of this can be seen in monetary policy. credit card debt. according to quarterly report household debt and credit According to the Federal Reserve Bank of New York, the average American's credit card debt was on the rise at least through the second quarter of 2023. According to the report, credit card balances increased by $45 billion between the first and second quarters of 2023. This means that he increased by 4.6% in one quarter. The total debt owed by cardholders is $1.03 trillion, according to the report.
of average balance Credit card fees are $5,733 per cardholder. Additionally, the average interest rate for credit cards in Q2 2023 was 20.68%. This means that someone who only makes the minimum monthly payment on their average credit card balance of $5,733 ends up paying more than her $1,000 in interest. The situation gets even worse when you consider the fact that many credit card holders pay off their credit cards in full, so their actual credit card balances can be even higher.The money you end up paying for exorbitant fees Interest level It could have been used elsewhere.
Another economic burden on the American economy comes in the form of student loans. The country's student debt, which has been accumulating for years, will decline in 2023. Nevertheless, $1.7 trillion in federal student loans outstanding; Student loan debt accounts for almost 93% of all debt. There are currently more than 43 million student loan borrowers. The average federal student loan debt balance is over $37,000.
However, the US government is aware of this situation and sometimes implements student debt forgiveness programs. Most recently, the Biden administration took office in January 2024. approved Cancel the debts of 74,000 borrowers. These borrowers include public servants such as firefighters, nurses, and teachers. Of those, 30,000 had been repaying their student loans for at least 20 years.
Taking out student loans or racking up credit card debt are part of our list. The 20 biggest financial mistakes young people makeHowever, you should check the list to see where they rank.
Customer withdrawing money from ATM. It shows that the company's accounts are widely available.
methodology
In order to carefully select the list of 20 financial mistakes young people make, we went to Reddit and sampled five relevant threads to read people's real-life experiences. We did this instead of sampling opinions. financial master Because we learn best from our mistakes. We wrote down each answer that contained a financial mistake and its upvote. We then categorized these responses into 20 financial mistakes by identifying common themes. We then summed the total number of responses for each category to create an Insider Monkey score. The higher this score, the higher the ranking of financial mistakes in the article. We used the total number of upvotes for each category of answers as a tiebreaker.
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20 – Driving under the influence
Insider Monkey Score – 1
It may not be so obvious, but driving under the influence (DUI) is a type of dangerous driving. The biggest financial mistake young people make. A DUI violation can result in a $10,000 refund. Costs include attorney fees, court fines, and car towing costs. In addition, drunk driving increases your chances of injury and incurs additional expenses in the form of medical bills and lost income.
19 – Not managing college costs effectively
Insider Monkey Score – 1
Aside from tuition fees, college costs can put a huge strain on the overall household budget. College students can expect to spend up to $50 a week on books and study materials. Reddit users say their biggest financial mistake was buying new college books when used books were available for a fraction of the price.
18. Reckless driving
Insider Monkey Score – 1
Reckless driving is one of them. The biggest financial mistake young people make. If an accident occurs, you could spend thousands of dollars in repairs and treatment and lose income, either temporarily or permanently.
17 – Making bad decisions regarding career advancement
Insider Monkey Score – 2
one of The biggest financial mistake young people make You are making bad decisions regarding your career growth. Some people stay in a particular job for a long time because of limited learning or financial growth. On the other hand, some people change jobs so often that they lose the trust of potential employers and limit their long-term career growth.
16 – Underestimation of child support
Insider Monkey Score – 2
Not considering or underestimating child support before starting a family is one problem. The biggest financial mistake young people make.High quality early childhood care cost $1,300 per month for families. Many people who are not financially prepared underestimate this expense and start a family, which can negatively impact their finances.
15- Payment is minimum credit card payment only
Insider Monkey Score – 2
Paying only the minimum amount on your credit card balance is The biggest financial mistake young people make. By only making the minimum payment, cardholders will accrue interest and the balance will grow over time, keeping them in debt for longer. Credit scoring models also take into account your credit utilization rate when calculating your score, which negatively impacts your credit score report and makes future borrowing more expensive.
14 – Don't establish an emergency fund
Insider Monkey Score – 2
Without an adequate emergency fund, individuals can be exposed to unexpected financial crises. Serious emergencies, such as job loss or serious medical problems, can occur at any time, and having a sufficient emergency fund can cover your expenses.
13 – Not choosing the right career
Insider Monkey Score – 2
Not choosing the right career is a financial mistake that many people make. Users on Reddit point out that individuals should try to find a balance between their interests and the financial possibilities of the job.
12 – I have no plans to retire.
Insider Monkey Score – 2
Not having a retirement plan is number 12 on our list. The 20 biggest financial mistakes young people make. Reddit users point out that young people are so indifferent about their retirement that they don't think about building a retirement portfolio until it's too late.
11 – Spending too much money on clothes
Insider Monkey Score – 2
Clothing expenses can take a big toll on an individual's household finances. Many Reddit users point out that young people often buy expensive clothes that they later regret.
10 – Not enough budgeting
Insider Monkey Score – 3
One of them is not being able to make a budget. Top 10 financial mistakes young people make. It helps you track your expenses, making it easier to manage unnecessary expenses and invest your money for returns.
9 – Indulge in gambling
Insider Monkey Score – 3
Indulging in gambling is one of them. The biggest financial mistake young people make. Research shows that young people are more susceptible to the negative effects of gambling, including addiction.
8 – Do not select employee sharing programs
Insider Monkey Score – 4
You can also opt out of the employee sharing program. The biggest financial mistake young people make. This is especially true for companies that allow employees to lock in future stock purchase prices.
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Disclosure: None. The 20 biggest financial mistakes young people make Originally published on Insider Monkey
