10 Biggest Personal Finance Mistake Young Professionals Make

Money is of utmost importance and if not dealt with in the right way, it could land you in some financial and personal stress. This is true that sometimes you need to lose money to learn about losing money.

What you are today is the result of all the financial decisions you have taken in the past. Any decision you made can either break it or make it for you.

From entering late into investment to indulging in unnecessary borrowings, almost everyone makes financial mistakes at some point in their life.

People are very good at finding ways to screw up their finances. Whether it is mixing out their credit cards, or not being able to make the payments on a car they can’t afford, they make the same mistakes over and over.

The sad thing is that so many people aren’t in debt, bankruptcy or foreclosure because of things beyond their control and they are making avoidable mistakes.

Here is a list of some of the most common personal finance mistakes that young professionals make.

Spend more than you earn

It seems like a simple idea to spend less than you earn.

But the problem is that in this day and age when credit cards and home equity loans are pushed like crazy, far too many people fall prey to advertising messages telling them to live in the moment and enjoy things now while they are still young.

The end result is a pile of debt and a negative worth.

Investing Late

Many of us often procrastinate when it comes to investment. We usually prioritize spending at the moment and keeping savings for later.

Starting investments late will only limit your returns and now allow you to get the full benefits of compounding.

Starting to investment early also gives you the liberty to explore various investment instruments as you have bigger horizon to invest and a greater risk appetite.

No to diversification

Not diversifying risk is to deny yourself the cheapest investments. You just invest in different things that don’t necessarily go up and down together.

By doing so, you will have a little debt, a little equity, some real estate and so on.

Meeting debts with savings

Withdrawing money is easier than depositing it. It is easy to kill your savings to pay off your debt, but again depositing the same amount is a difficult task.

The best way is to automate your payments. This teaches you not just to save more, but also to live on less money.

Spending your savings early in life could financially impair you in the future.

Investing in Depreciating Assets

Borrowing money to purchase assets such as automobiles is an example of investing on a depreciating asset. As time proceeds, its value is going to decrease.

One should avoid spending a lot on such assets if you don’t need it and your financial condition doesn’t allow meeting the loan with ease.

These are basically fruitless investments which will add nothing to your net worth.

Stretching the Budget

Your financial situation and security in the future depends on how you are spending your money now. Individuals who spend without saving first often invest poorly resulting in worst situation in future.

It is very important to budget for various contingencies, long and short term requirements, and then only make discretionary expenses out of your remaining disposable income.

Working without a net

Many people these days have been walking on the financial high wire for far too long without a net.

They don’t have any emergency fund; the only thing they have is a mountain of monthly debt obligations ultimately leading them to financial death in case of financial stressful situation.

To avoid such situation, they should be saving up, buying the necessary insurance and getting rid of as many debt obligations as possible.

Not filing your taxes


When you wait so long to file, you may miss important deductions that can really save you a lot of money.

You can even get more money back if you keep all of your necessary financial paperwork and have a professional help you find every penny possible.

Impulsive Loan Buying

The easy availability of Personal Loans and Credit cards often tempts people to borrow without a care. Repaying your debts is your moral and legal obligation.

It is always advised to borrow up to a level where one is comfortably able to repay with your regular income. Borrowing beyond your limit may put you at the risk of default.

Lending out to families and friends

You would love to help relatives and friends when in need of money. But definitely not at the cost of your monthly budget or savings.

One should always lend the amount that won’t bother your financial situation at all. Money between relationships is never a good idea either way.

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One Comment

  1. Hello,
    First of all, Thank you so much for providing this very useful information to youngster and me. Before my personal finance business, you give me the right way. So, Again Thank you so much for Provide this very useful information.

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