1) Not Working In Your Teens
According to Child Trends the number of people working in high school and college have been lower than before the 2008 recession. This is a pity. I know that studies in high school make you pretty busy, but what about summer or breaks? Do you not have those? I believe missing out on work is one of the gravest financial mistakes to avoid while young.
Many people say that it is harder to get a job now than it was before the recession. I don’t see it, I have had a job every summer after 2008 until I graduated from high school. Also, I had work and internships every summer during college. I grew up in my teens during the recession and still found work. Some was with family, but only 2 out of 7 times.
Now with the recession over and the economy improving at the very least, I see “Now Hiring” signs almost every three stores. It would be hard not to find a starter job, and at times you cannot, there is no shame in looking for work with or through family and friends.
I see working while young teaches you the value of work. Not only do you have spending money, but now you can actually tell how hard you have to work for something. Instead of a dollar value, you can determine how many hours, weeks, or months you must work to buy something.
2) Not Having A Savings Account
Whether you have a job or not, it is incredibly easy to just start making money in your teens and spend it irresponsibly. I know plenty of co-students who never saved a penny in their teens (and probably still don’t). It is crucial to start saving when you do not necessarily have to spend money.
Saving will prevent debt when emergencies come up. Even in your teens or early twenties accidents do happen. This is arguably the most lethal of financial mistakes. Avoid this at all costs (pun partially intended).
3) Not Building Credit
I mentioned before how it can take a few years to build up good credit. If you do not start in your teens or twenties, this could be detrimental. Not only can you be denied loans, but you can be denied jobs in most states. As ridiculous as that sounds I know in the military they would like to hire people who cannot be compromised. It is hard to say you are uncompromising if you have massive debt. For all they know they may be concerned about giving out secrets to make money suddenly.
I recommend getting a credit card while young. There are other ways to build credit established in a previous post.
4) Building Up Too Much Debt
While building credit is good when you are young you should never build debt while you are young. Can you build wealth while you have credit card debt? It is at least very difficult.
Avoid creating debt while using it to build credit.
5) Never Investing
Compound interest is one of the most powerful phenomenon in the world. While the effects can be seen in as little as a few years, it will do far more in a few decades. Assuming the 7% interest rate (inflation adjusted S&P 500) your money will double every decade. Starting investments a decade later will slash the money you could potentially make and your assets will be hundreds of thousands less than it could be.
Starting earlier allowed me and my wife to pay for our wedding.
6) Buying Liabilities
People may be asking what liability they could potentially buy when they are young in high school or college. Ever heard of cars? For the men out there its almost like if you turn 16 suddenly you need one just to drive around, use gas, drag along people you do not like. No I’m kidding, it was to impress girls. (At least for me, I’m not sure if men buy cars to impress men or if women buy cars to impress women).
Cars are money sinks. I mentioned how one of my old friends got a car and could not get the money to maintain it and get insurance. Unfortunately getting a car is one of the greatest liabilities when you are young, and it will be when you are older.
Avoiding these financial mistakes when you are young will help you forge your wealth.