In the specific, it is sometimes possible to find the general. I wish I were more unique, but I suspect the mistakes mentioned in this following article are not unusual.
More likely, they are common mistakes to make. Despite this, their effect has been far-reaching and quite damaging to long-term financial security, so take them as a lesson Generation Y, and if anyone wants to find me some way of time travelling, then please let me know.
1. Not budgeting properly for overseas travel
I didn’t make this mistake once but twice. Overseas travel is a wonderful experience, but if you don’t have the fund to cover it, you need to make some tough decisions. This was where I fell down. I had committed to a certain amount of time and a certain lifestyle in my head, and when my finances couldn’t support it, I covered the deficit with a credit card. Yeah, not real bright.
If you’re planning a big trip or a big expense, make sure you’ve budgeted properly for it. Don’t run your finances so close to the line that one little accident or emergency will plunge you into the red. If you can do 3 months properly or 5 months on a credit card, think about a life of credit card repayments and go with the former.
2. Living pay to pay
Needless to say, returning to Australia to start a university degree with zero money does not make you first year of independent living an easy one. The patterns that I got into from that first initial mistake meant the next three years were characterized by an enormous splurge (when my monthly pay check came in) and then extreme denial (when the money ran out a week before my next pay check was due).
Don’t live independently unless you have put together the means to do so. Ensure that you pay yourself first (or, at least, your savings first) so that there is financial fat to cover you at the end of the month should an unexpected bill crop up.
3. Thinking that super was for old people
Ah, the arrogance of youth. I don’t think this anymore. Working independently, now is the time for me to set up voluntary contributions so I don’t have to live with my decisions in 40 years time. After all, I’m already 5 years behind the game with super and savings due to my assertion that mine was a life that required liquidity of funds.
Plan early, plan often and pay your super. How on earth the government will be able to support our ageing population is beyond me, make sure you’ve planned for yourself.
4. Having a credit card
Repayments, mounting balances and the feeling of being in debt. Bad, bad, bad. At my age, my entire income is disposable; there was no real need to get a credit card. But I did, and I’m still paying for it.
Don’t do it. If you need credit capabilities, get a credit card that is only linked to your savings account.
5. Choosing what was easy
Budgeting is hard. Saying no to another night out at the pub, even when you really can’t afford it is hard. But the aftermath of all those easy decisions is harder than anything else. Having a dose of realism and a sprinkling of discipline in my financial dealings would have made all the difference to me now.
Budget, save, don’t go to the pub 5 nights a week.