Jehan Divecha – As young people begin their journey into adulthood, they may find themselves struggling to manage their personal finances. This can be due to a lack of knowledge or experience in managing money, which can lead to common mistakes that can impact their financial future. Here are six common personal finance mistakes young people make and how to avoid them.

Not having a budget

According to Jehan Divecha, One of the most common personal finance mistakes young people make is not having a budget. A budget is a plan that outlines how much money you have coming in and going out each month. Without a budget, it’s easy to overspend and lose track of where your money is going.

To avoid this mistake, start by creating a budget. Write down your monthly income and expenses, including rent, utilities, groceries, entertainment, and savings. Make sure you prioritize your essential expenses, such as rent and utilities, before allocating money to discretionary spending.

Living beyond your means

Living beyond your means is another common personal finance mistake young people make. It’s tempting to want to have the latest gadgets, trendy clothes, or go on extravagant vacations, but if you’re not careful, it can lead to debt and financial instability.

To avoid this mistake, create a realistic budget that takes into account your income and expenses. Be honest with yourself about what you can afford and what you can’t. Avoid overspending on non-essential items and focus on saving for long-term financial goals.

Not saving for emergencies

Jehan Divecha says, Emergencies can happen at any time, and it’s essential to have a financial safety net to fall back on. However, many young people make the mistake of not saving for emergencies, which can lead to financial hardship when unexpected expenses arise.

To avoid this mistake, set aside a portion of your income each month for an emergency fund. Experts recommend saving at least three to six months’ worth of living expenses in case of job loss, medical emergencies, or unexpected bills.

Not investing for the future

Investing for the future is essential for long-term financial security, but many young people make the mistake of not investing early enough. They may feel like they have plenty of time to save for retirement, but the earlier you start, the better off you’ll be in the long run.

To avoid this mistake, start investing in your future as soon as possible. Consider opening a retirement account, such as a 401(k) or IRA, and contribute a portion of your income each month. It’s also a good idea to diversify your investments to minimize risk and maximize returns.

Relying too heavily on credit cards

Jehan Divecha says, Credit cards can be a useful tool for building credit and managing cash flow, but relying too heavily on them can lead to debt and financial stress. Many young people make the mistake of using credit cards to fund their lifestyle, which can lead to high-interest rates and fees.

To avoid this mistake, use credit cards responsibly. Only charge what you can afford to pay off each month, and avoid carrying a balance. Consider using a debit card or cash for discretionary spending to help you stay within your budget.

Not seeking financial advice

Finally, many young people make the mistake of not seeking financial advice. They may feel like they don’t have enough money to invest or think they can figure it out on their own. However, seeking the advice of a financial professional can help you make informed decisions and avoid costly mistakes.

To avoid this mistake, consider working with a financial advisor or planner who can help you set financial goals, create a budget, and invest for the future. They can also help you navigate complex financial issues, such as taxes and estate planning.

According to Jehan Divecha, Managing personal finances can be challenging, but it’s essential to take a proactive approach to avoid common mistakes and achieve long-term financial success. By creating a budget, living within your means, saving for emergencies, investing for the future, using credit responsibly, seeking financial advice when needed, educating yourself about personal finance, and practicing good financial habits, you can set yourself up for a stable financial future. Remember, the earlier you start, the better off you’ll be in the long run.