Knowing how to manage your finances well is the first step towards financial independence. Unfortunately, in our country, the financial literacy of the population is still lame on both legs. Often 11th graders are completely unprepared for adult life and dealing with money. This became especially evident after a study conducted by the Central Bank of the Russian Federation in 2020, which clearly demonstrated the high level of indebtedness of the population, the lack of investment knowledge and the inability to set financial goals. Fatima Yanbayeva, financier and expert in personal finance, explained what mistakes are typical for young people and how to avoid them.
“The main mistake of adolescents is that they often postpone the start of capital formation to a ghostly “later”: tomorrow, a year from now, when I “will be up”, or “grow up”. In fact, earlier you will start saving and building personal capital, the sooner you can gain financial freedom,” says the expert.
A clear example of how age matters is the most famous investor of our time, Warren Buffett, who began his journey to financial Olympus at the age of 10. It is thanks to his beginnings so young that today he is one of the richest people in the world. Indeed, in the process of accumulation, time plays in the hands: at a certain moment, compound interest begins to work, which considerably increases the capital. Therefore, to the question of when to start saving or investing, there is only one correct answer: “Yesterday”. The best day to start building your capital was yesterday. But don’t worry – start today and in 10-20 years you can afford this very “good life”.
There are many mistakes in dealing with personal finances. But there are among them the most common. This list includes:
- Non-setting of objectives. Most young people, unfortunately, live exclusively for today and do not think about the future at all. In the meantime, well-defined objectives make it possible to be more efficient;
– No delta between expenses and income. We are talking about situations where, at best, all that is earned is spent, and at worst, debts are formed;
– Uncontrolled use of credit cards and loans. And more often than not, students who are guided by emotions and who make impulse purchases with borrowed funds are most often subjected to it.
In order to avoid or correct existing financial mistakes, one should not forget about folk wisdom: “A penny saves a ruble.” When it comes to savings and investments, even 100 rubles are of great importance. For example, if you set aside 100 rubles a day, the amount of 36,500 rubles will come out in a year. And if you save in a savings account at 5-7% per year, the result will surprise you even more. It is equally important to learn how to use cashback on debit cards correctly. A small but good bonus can also be set aside in a savings account or investment bank, increasing your savings. In such an uncunning way, it is quite possible to save for a vacation in a year’s time, provided that a person knows how to plan. Unfortunately, this skill is also lacking in a large number of young people. Although the possibility of resting after a busy academic or work year is a great motivation to achieve unprecedented results.
“The reason for most mistakes in managing personal finances is a lack of financial literacy in the family. Who do children learn from? Of course, with parents, and if the family does not practice setting financial goals, engages in savings and planning, but rather promotes life on credit by their example, then what kind of correct financial behavior can we speak. In this regard, as in many other aspects of life, everything starts with a family and a personal example,” says Fatima Yanbaeva.
However, not everything is so bad. We live in an incredible time where knowledge is accessible to everyone. You can set a goal and start improving your financial literacy today to have confidence in the future.
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