Financial Missteps

You just graduated undergrad. You moved out of your dorm room or an apartment footed by your parents and it’s time to make your own way, time to find a job that actually supports you and to blaze your way in the world, to make a name for yourself and lay the foundation for the rest of your professional career. However, how to do so while maintaining a keen eye focused on your personal finances is a difficult task to manage for those just beginning to work full-time. It’s a common scenario, men and women in their early twenties entering the job market with little to no knowledge of personal finance. As a result, these men and women are prone to making what are avoidable mistakes, and then these missteps proceed to affect said young professionals throughout the rest of their professional life.


In light of such, I have elected to lay out what I believe to be the most common of these mistakes, so as to mitigate the negative repercussions associated with poorly managed personal finance practices:


Being Hesitant to Take Responsibility for your Finances


When we first enter the job market, there is so much we don’t understand yet so much we are expected to do. “Start saving for retirement.” “Purchase a life insurance policy.” “Diversify your stock portfolio, but don’t take out a loan!” “Don’t go into debt!” “Don’t live beyond your means!”


It can be frustrating to many that, although making the least amount of money they will (ideally) make in their career, they are expected to begin saving money and acting responsibly immediately. This all said, there are two main takeaways here:


-Protect your income and don’t run up new debt (like credit cards, for example)

-Balance your finances; and don’t get upset if you haven’t developed the fiscal discipline required to properly do so at first. Like anything else, practicing responsible personal finance takes practice and you are not expected to master it instantly. In fact, there are many ‘well-adjusted’ adults who have yet to figure it out.


Not Having Disability Insurance


While not all insurance is relevant to young professionals, disability insurance, on the other hand, is nearly always a smart decision. Believe it or not, suffering a disability that keeps you out of work contributes to 62% of all personal bankruptcies (source). That said, a measly third of Americans have disability insurance. Perhaps this immense irrationality is due to ignorance, but it nonetheless indicates a vital need for education regarding finance and appropriate insurance.


Not Having Enough Life Insurance.


Most people qualify for group insurance through some employer benefit or another. However, this sort of coverage very often does not provide the necessary coverage one requires in the modern world. In reality, individual insurance is very commonly a better choice for most men and women. Furthermore, it generally costs much less than what people think, and it doesn’t just evaporate when you change jobs. While life insurance may not be a priority for a young professional without dependents, that does not mean it is any less significant or relevant. On the contrary, it can be a fantastic decision reflective of fiscal responsibility when one considers that life insurance is likely to be the cheapest it ever will be for those just entering the market. If you can afford it and lock in protection now, you will be happy you did so in the future when your family is reliant upon your income.


Mistakes are inevitable. No one is perfect. You will make the wrong decision, but that’s no reason to mitigate a potentially wrong decision’s consequences. Strive for the best, and although you will certainly misstep here and there, you will be in a far better place if you begin taking responsibility for your finances early on in your career.