We all make mistakes. But some mistakes can ruin your life. Yet these mistakes are all avoidable. This is especially for the young guys and girls out there. These are the top 3 mistakes that will financially ruin you!
Life will deal you plenty of harsh lessons. Sometimes bad things happen that are unavoidable, but there are plenty of mistakes that are avoidable.
By knowing about these mistakes, you have the ability to avoid them in advance. Just by avoiding these mistakes, you will find yourself ahead of most people.
There is a saying that smart people learn from their mistakes. Indeed, that is true. However, it is often wise people who learn from the mistakes of others.
With that, here are 3 mistakes that will financially ruin you:
Mistake #1 – Being Financially Illiterate
We are all born illiterate, financially or not. But that doesn’t mean we have to stay illiterate.
Personal finance isn’t something that is taught in school. Rather it is something one must learn (often) on their own. However, there are plenty of resources to help you get started.
I know many may think it’s boring, dumb, tedious, don’t like math, money is evil, etc.
But one of the worst mistakes you can make in life is ignore personal finances and never learn how to handle money.
Imagine a life where you never learned how to set a budget, never knew how to manage or handle debt, never knew how to save or invest money, never knew how to set short or long-term financial goals, never knowing a thing about banks, interest rates, inflation, stocks, etc.
Well, that was me at age 26. It was an awful experience. Don’t be me at age 26! Be better!
The younger you learn about finances, the better off you will be. Indeed, studies have shown that children who are exposed to financial education do better financially then children who are not!
Nevertheless, you are never too old to learn about personal finance. The best move you can make at any age is to become financially literate.
Take your financial future seriously.
It doesn’t matter if you are already wealthy, without financially literacy you will lose everything.
Take lottery winners.
People win tens of millions of dollars in the lottery every year and you know what happens? The vast majority (70%) end up broke and filing for bankruptcy within 5 years. Some even end up dead!
Why does that happen? Because they have no knowledge on how to handle money (let alone large amounts of money).
How to manage your personal finances is a skill everyone needs to develop! You can’t afford to be financially illiterate!
Mistake #2 – Having Children You Can’t Afford
If there is a number #1 worst thing you can do in life to destroy your finances (next to murder) this is the worst thing.
Having a child that you can’t afford is a good way to utterly destroy your financial future.
Most people want children. They want to start a family. And that is great, but when you are going into the responsibilities, financial and otherwise, that come along with having children – most simply do not understand the magnitude.
Children are expensive to have and raise!
To start it off, the average cost of just giving birth to the baby alone is between $5,000 to $11,000 is most States in the USA. That’s assuming there are no complications.
Fortunately, health insurance plans will cover most, if not all of that (assuming you have health insurance).
But that is just the tip of an enormous iceberg. Next, comes the cost of raising the child.
Back in 2015, the average cost of raising a child to age 18 was $233,610. It is the year 2022 now, so I’ll be very optimistic and say the average cost today is at least $250,000 to raise a child to age 18.
So, you will spend average of $250,000 over the next 18 years raising a child. That’s nearly $14,00 per year on average. And that is just for one child. Imagine having two, three, or four children.
I’m not saying don’t have kids. Starting a family and having children certainly brings lots of happiness and is one of the greatest joys in life.
What I am saying is be prepared and understand the financial commitment you are making. At the very least, become financially literate and get your finances in good shape beforehand as much as you can.
Obviously, it is better having two parents shouldering the responsibilities then one (a family unit with a mother and father is advantageous in more ways then just financial).
Imagine being 19 years old, still in school, no job, not sure what you want to do in life, still finding yourself, not truly in love with you partner, and now you have a baby on the way that you will be responsible for.
That is a tough financial way to begin life. You have shot yourself in the financial foot and have given yourself an enormous hole to climb out of.
So please, if you are young especially, use the necessary precautions to avoid unaffordable pregnancies. Ladies, use the pill, and guys, use the condom. Birth control exists for a reason.
Avoid having kids you can’t afford. People having children they can’t afford is an enormous source of poverty in the world today. Children are expensive to raise!
Mistake #3 – Majoring in Worthless College Degrees
What better way to set yourself up for financial failure then to take out a $40,000 student loan and major in bubble gum studies? I’m sure that degree will get you far.
Sadly, that is pretty much the equivalent of nearly all liberal arts degrees: worthless!
The total amount of American student loan debt stands at $1.75 trillion. The average student loan debt is over $37,000 (private student loan borrowers average over $54,000).
How many times have we seen the person with a 4-year Women’s Studies degree working as an underpaid barista at Starbucks?
Or the person who has a degree in English who still lives with their parents at 28 years old and is unemployed with $50,000 in student loan debt to be paid?
I made that same mistake. I majored in government/history for my Bachelors degree (4 years) and to make things worse I majored in history for my Master’s degree (3 years).
Luckily, my student loan was small by the time I was finished and I paid it off.
But still, that was a total of 7 years of my live wasted!
If I could do it over again (now that I am financially literate), I would have gone into engineering or trade school. I would have started working and investing at a much younger age.
Indeed, the highest paying jobs in terms of median wages tend to be in the medical profession. Followed by that is engineering and trade school jobs (which shows strong job growth prospects due to these skills being in demand).
What are the worst degrees to have in terms of low-pay, job prospects, and employment? You guessed it: Liberal Arts degrees!
Majoring in worthless degrees not only wastes money, but time. That is time of your life that you will never get back.
That is time you could have been building a career with a solid financial foundation. And that is time you could have been investing your money.
The earlier you start the better! Your 20’s are an important time to be building your wealth, not going deep into debt for a worthless degree.
I would never argue that a college degree with a high paying job attached is the key to success, but if you are financially literate and have a long-term plan, it is a fantastic opportunity.
Conclusion: 3 Mistakes That Will Financially Ruin You
There are the top 3 mistakes that will financially ruin you! If you can avoid these three, you will have the ability to live life better than most.
If I had to add a 4th huge mistake it is this: marring the wrong person.
Marring the wrong person would be a huge drain on your finances and personal life. But marriage has more gender specific consequences.
Men in a divorce will fair much worse than women in terms of finances, losing half your wealth and/or assets, alimony, child support, etc. In today’s times, it is far better to avoid marriage altogether then tie the knot (noose?) with the wrong person.
They say that making the right moves will lead to a good life, but truth is, you can live a pretty good life just by not making bad moves.
If you haven’t made these mistakes, you are far better off then most people on this planet. Stay the course, and make your future the best possible.
So, what do you think of this post? Any other mistakes you would like to add that people should avoid for their financial well-being?
Let me know in the comments below!
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