Financial security & prosperity is the ultimate goal of many, which unfortunately remains elusive for some.
It is the simple mistakes that make the big difference between those who attain it and those who don’t.
While there is no universal formulae to attain financial security, experts have over the years delved into the mistakes that may be costly, establishing trends and mistakes that should be avoided in 20’s and 30s if one hopes to attain financial security and prosperity.
Your 20s and 30s are among the most productive years of your life when the foundation for economic success is laid.
Earn money in your free time, including from hobbies
Failing to diversify your income sources is a recipe for failing to attain economic success. While a reliable job or business may be sufficient to meet daily expenses, it leaves one vulnerable to financial uncertainty should circumstances change, and they do so frequently.
To build a financial cushion against uncertainties of life, consider taking up side hustles that you enjoy as a means of expanding revenue streams.
READ: Is your lifestyle keeping you broke? 6 financial habits you should change
This also includes turning hobbies into opportunities to make income or making investments that generate returns.
While at it, balance making money with having adequate rest to stay productive while also creating time to spend with loved ones.
Not Setting Set Financial Goals
While financial security and prosperity is the ultimate goal, having achievable short and long term goals are key in guiding your efforts and sacrifices in attaining the overarching goal.
Failing to set Specific, Measurable, Achievable, Realistic, and Time-bound goals could be a costly blunder that may see you fail to attain financial independence and prosperity.
Goals also help one stay on track appreciating that each sacrifice made is for a worthy course and attaining a goal however small or big it is brings you closer to the ultimate prize.
Take care of the pennies and the pounds will take care of themselves is a saying that rings true when it comes to spending money.
Making unnecessary purchases
While making expensive, luxurious and unnecessary purchases may be exciting at this age when one is starting to enjoy life and pay their bills, doing so leaves a dent in the pocket.
READ: 10 hard truths about debt every young person must learn
Comfort comes at a price that one should be able to afford without straining. If any purchase make you strain financially or works goes against attaining your financial goals, it may be worth giving it a second thought or deferring incorporating it into your plans and saving for it.
Assess whether you really need the item, whether you can afford it and whether more affordable options exist.
You work hard and should enjoy the fruits of your efforts. As such, making a smart plan and saving to make some purchases is key.
Living beyond your means and failing to budget
Spending more than you earn is the surest way to get yourself in a debt trap from where you may never come out.
Small steps such as tracking expenses and inflow of income position you better to know exactly how much you can spend without compromising your savings, investments and financial goals.
A budget allows you to have complete control and a clear understanding of where your money should be spent.
It allows you to balance your income with your expenses.
Regularly review your expenses and establish areas needing adjustments as well as cost-saving steps that can be supportive of your goals.
Not taking calculated risks and investment opportunities
Calculated risks and prudent investment taken in your 20s and 30s can be the big difference between financial security and lack of it.
Risk-taking is fundamental to sound investing and it is equally important to understand that money invested can be lost.
Evaluate your appetite for risk and only invest money that you are willing to put at risk after carefully weighing the risks and benefits.
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