Common Budgeting Mistakes That Young People Make

Defaulting on Loans

 

Finding a job after college can be quite difficult especially when employers are looking for experienced workers. This has contributed to 26% of Americans under 30 defaulting on their loans. The study conducted by two financial institutions namely Credit Karma and Qualtrics. Lack of a steady source of income should not translate to you defaulting on your loan. One way you can avoid this problem is calling your bank or card company and renegotiating payment terms. Card companies are always willing to help out those going through tough financial and you will find a suitable payment plan. 

 

Building a Poor Credit Score

 

A good credit score can open many financial doors in future. Many young people ignore this fact and end up missing out on loans when they need the most. Nearly all financial institutions check your score to determine your financial risk levels. You should build up a good credit score and guard it with all your life. 

 

Misusing Your Credit Card

 

Impulse buying is quite rampant with young people. You see something nice and you rush to get it. Buying like there is no future increases your financial burden. Discipline is one important factor that you should develop when buying things. You should always ask yourself if what you are getting will make a positive impact on your life. This will be key in protecting your financial life as an adult. 

 

Failure to Understand How Credit Cards Work 

 

Many young people rush and take credit cards when the opportunity arises. Getting a credit card can prove costly in the long run particularly when you are an impulse buyer. Credit cards may contribute to a poor credit score and leave you with a huge loan. Before rushing to your bank and getting a credit card you need to understand a few things. First, read and research about how interest rates work. Secondly, check the consequences of paying late or defaulting. Read the fine print before signing that contract with your bank. This will save you from a lot of trouble in the near future. 

 

These are the most common mistakes young people and now let’s look at how you can get out of any debt. 

 

Getting out of debt will improve your financial life and credit score. We have prepared 4 strategic ways that will help you in settling debts quite easily and faster. 

 

Getting a Debt Loan

 

This may sound scary and confusing to you but let us explain why it is your best bet. First, getting another loan helps you negotiate a better interest rate and settle the first one. Secondly, you can consolidate all of your loans by paying all of them at once.This reduces your stress levels and helps you build a good credit history with your bank. Finally, you will put a stop to all those collection calls. 

 

Use Credit Karma and Read Credit Related Articles

 

Financial knowledge is critical in this day and era. The unfortunate thing is that colleges and schools do not prepare one for the tough financial conditions out here. Research more about finances and also find out about credit repair programs. This way you will manage your finances and have better control over your finances. 

 

Use Gift Cards When Shopping 

 

Major retailers like Amazon now offer buyers the opportunity of linking their credit cards as a payment option. What many don’t know is that this can lead to impulse buying, leaving you with a lot of unnecessary items. Gift cards, on the other hand, help you save a lot of money on purchases made on such websites. Secondly, you improve your budgeting and cut down on impulse buying.

 

Maintain a tight budget

 

Good budgeting skills are essential in this day and age. Knowing what to get; when to get it; when to use a coupon: is what we call “good budgeting”. Always have a budget with two a lower spending limit and higher spending limit. Most young people, however, have poor budgeting skills. Train yourself and use sites like Google to help you improve on budgeting.

 

Credit cards should not destroy your financial future. Start by taking control today. Employ what you have discovered today and take control of future.