Financial habits young adults overlook and how to avoid their consequences

group of young adults watching the sunset

In today’s world, young adults are faced with a myriad of unique financial challenges. From exorbitant student loans to skyrocketing housing prices and mounting consumer debt, achieving financial stability has never been more challenging. However, the decisions that we make during our formative years can have significant long-term impacts on our overall financial wellbeing. For many of us, the financial best practices that we failed to adopt in our youth can haunt us as we get older. In this blog post, we’ll take a look at the top financial things that young people don’t do, and how neglecting these fundamental financial principles can have long-lasting effects. Whether it’s failing to save money, ignoring the importance of credit, or failing to invest in ourselves, there are a number of key financial decisions that we often overlook when we’re young. Through examining these common missteps, we hope to provide young adults with a better understanding of the financial habits that they should adopt early on to ensure success and stability.

1. Starting saving for retirement early

Retirement planning is often ignored by young people who are busy building their careers or paying off debts. However, starting to save for retirement early is one of the most effective ways to secure your financial future. The earlier you start saving, the longer your money has to grow and compound over time. Even small amounts saved early on can add up to a significant amount over time. If you start saving in your 20s, you can save less each year and still end up with more money at retirement than someone who starts saving in their 30s or later. Therefore, prioritizing retirement savings and making it a habit to set aside a portion of your income can help you achieve your long-term financial goals and ensure a comfortable retirement.

2. Creating and sticking to a budget

This is crucial when it comes to achieving financial stability. Unfortunately, not everyone realizes the importance of budgeting at a young age, and this can lead to financial difficulties later in life. By creating a budget, you can develop a clear picture of your income, expenses, and financial goals. This will help you make informed decisions about how to spend your money, and enable you to identify areas where you can cut back on unnecessary expenses. Sticking to your budget can be challenging, but it can help you live within your means and avoid accumulating debt. When you have a good grasp on your finances, you can make better long-term financial decisions and achieve your goals, be it buying a house, starting a business, or saving for retirement. Incorporating a budget into your financial plan is taking control of your spending habits and building a strong foundation for your financial future.

3. Avoiding high-interest credit card debt

When we are young, we may not pay much attention to our finances, which can lead to long-term consequences. One of the financial habits that we often overlook is the accumulation of high-interest credit card debt. This kind of debt can be particularly insidious, as it can quickly grow into a substantial burden that can take years to pay off. Therefore, it’s crucial to avoid high-interest credit card debt whenever possible. Instead, consider building a savings account that you can use to make purchases, and only use your credit card for things that you know you can pay off each month. This strategy can prevent you from falling into a debt cycle that could impact your credit score and financial future.

4. Building an emergency fund

This is one of the top financial things you likely didn’t do when you were younger. An emergency fund is a savings account that is meant to cover unexpected expenses such as medical bills, car repairs, or job loss. Despite its importance, many young people put off building an emergency fund because they believe that they will never need it. However, unexpected events can happen to anyone, and not having an emergency fund can put you in a difficult financial situation. Ideally, an emergency fund should contain enough money to cover at least 3 to 6 months’ worth of living expenses. Set aside a portion of your income each month and avoid unnecessary expenses. It may take some time to build up your fund, but having a safety net will give you peace of mind and protect you from financial hardship.

5. Investing in your education or career development

A financial decision that can greatly benefit you in the long run but many young people often disregard the importance of investing their time and money in educational or career advancement, and end up regretting it later. By continuing your education, you can acquire new skills and knowledge that can increase your job prospects and earning potential. You can also invest in career development through networking opportunities, professional certifications, and mentorship programs. These investments may require some upfront costs, but they can provide significant returns by opening up new job opportunities, increasing your salary, and boosting your overall career satisfaction.

6. Maintaining good credit

Another important financial habit to cultivate, yet it is something that many young people overlook. Having good credit is essential when it comes to applying for loans, renting an apartment or even when applying for a job. Lenders use credit scores to evaluate whether or not they will approve an individual for a loan and to determine what interest rates to offer. A good credit score can save individuals thousands of dollars over the course of their lifetime. By establishing good credit through timely payments and responsible borrowing practices, young adults can set themselves up for financial success in the future. It is crucial to monitor credit reports regularly and address any errors or discrepancies immediately to ensure that credit scores remain healthy.

7. Considering purchasing life insurance

One of the crucial investments that young adults often overlook is life insurance. It may seem like a distant thought when you’re young and healthy, but it’s important to plan for the unexpected. Life insurance provides financial security to your loved ones in the event of your unexpected death. It can help them cover expenses and debts without any financial burden. The younger you are when you purchase a life insurance policy, the cheaper it is. Therefore, it’s important to consider purchasing life insurance early on in your adult life.

8. Planning for major life events, such as buying a home or starting a family

As we grow older, significant events such as buying a home or starting a family can have a tremendous financial impact. It’s important to plan ahead for these events to ensure that you are financially prepared for the changes they bring. This may mean saving for a down payment on a home or building an emergency fund to cover unexpected expenses that come with starting a family. It’s also important to consider the long-term financial implications of these events, such as mortgage payments or the cost of childcare. Take the time to plan and prepare for major life events and you will be able to make informed decisions and avoid financial strain in the future.


While there may be regrets about not having made certain financial decisions earlier in life, it’s never too late to start. Whether it’s creating and sticking to a budget, establishing an emergency fund, or contributing to a retirement account, making sound financial choices today can go a long way in securing a more financially stable future. Learning from past mistakes and adopting healthy habits can lead to financial success and a life free of money-related stress. The most important thing is it’s never too late to start taking control of your finances and securing your financial future.

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