5 Money Mistakes To Avoid In Your 20s #Best Education Page #Online Earning

- How's it going today guys?

Welcome back to the channel,

hope you're having a great day so far.

So in this video here, we're gonna be talking about

the biggest financial mistakes that people

make particularly in their 20's.

Now some of these are mistakes that I have made myself

and I'm gonna share my personal experience

with each of these and others are mistakes

that I'm seeing other people making out there

so I hope you guys get a tremendous amount

of value out of this video and if you do

I would appreciate it if you would drop a like

and make sure you hit that subscribe button as well.

Let's go ahead and get started here

by starting off with number one,

what I believe to be the biggest mistake people are making,

especially as young people and that is

skipping the 401(k) contributions altogether.

I honestly can't blame young people for this mistake

because what it com
es down to is a lack of education

about what a 401(k) is, what compound interest is,

and how this all ties in together.

But just because the schooling system

has failed to educate you on this

does not mean that it is not extremely important

so if you're one of these young people out there

that have no idea what a 401(k) is,

you don't know if you're contributing

or you know for a fact that you aren't contributing,

I certainly hope this part of this video

motivates you to at least consider

contributing a small amount of money to your 401(k).

So just how bad is this problem?

Well, according to a survey by Money Under 30,

51.6% of Millennials are not contributing to a 401(k).

So the majority of Millennials,

the majority of young people out there

are saving nothing in their 401(k)s for retirement

and that just absolutely blows my mind.

And this is going to be a massive problem

20, 30, or 40 years down the road

when this group of young people's looking to retire

and their wondering why they have no money to retire.

What you have to understand here

is that compound interest is what

we call the time value of money.

And you have to give your money a very long time to grow

in order for it to grow into a meaningful amount

and I wanna walk you guys through an example here.

Let's say you decide to contribute

100 dollars a week to your 401(k)

and that's honestly not a lot of money.

That is maybe one trip out to eat

or two trips out to eat every single week.

We're not talking about a crazy amount of money here.

$100 a week and let's say you're earning an average return

of around 8% per year over a very long period of time.

Well let's say somebody decides to

do that from age 20 to age 65.

$100 a week going into the 401(k) earning an 8% return.

Well by age 65, they would have 1.86 million dollars.

A very hefty retirement, a very large amount of money there.

But let's say on the other hand,

one of their friends decides, well you know what?

I'm not gonna start doing that until I'm 30 years old.

So rather then contributing $100 a week from 20 to 65

they wait until 30 to 65, at the same exact yield

they're only going to have $827,000.

So just to make this simple for you guys,

that is a one million dollar mistake.

By waiting until age 30 to contribute toward your retirement

instead of starting at age 20,

you just cost yourself one million dollars

from that 401(k) on a $100 per week contribution.

So that is what is important here.

It's the amount of time that you're allowing your money

to grow, not necessarily how much money you are investing.

So if you know for a fact that you're not contributing

to your 401(k), that is a very important thing

you should be doing as a young person

and I hope you at least are open

to the idea of doing that now.

And at the very least, what I always tell people is

if your employer is matching your contributions,

oftentimes you'll see employers matching up until a certain

amount, always maximize what they're going to match.

One of my former employers, they would match 50%

up to 3% and so I would contribute 6% of my pay

into my 401(k) and they would give me 3% for free.

It's literally free money that so many

people are not taking advantage of.

It just completely blows my mind.

Okay, mistake number two is buying an expensive car.

Now this is something I've done myself

and it's a video I did on my channel

way back before I had a lot of subscribers.

I'll link up to it in the description below

and it's how I lost $9,480 in one year

by owning a car that was a flashy car.

Now the scary part of this is,

I bought a car that was a 2007

and this was back in, I believe 2016.

So this was a nine year old car

that I still managed to lose just shy of $10,000 on

in the course of one year and that was largely due

to the fact that I overpaid for it and then I traded it in.

I basically made every mistake you could make in the book

when it came to buying and selling that car.

But the scary part is it could've been a lot worse

if I bought a brand new car.

A one or two year old car right off the lot

or something like that for example.

You can end up losing a massive amount

of money by buying an expensive car.

So if you guys wanna check out that video,

I'm gonna link it up in the description below

but cars are what you call a depreciating asset.

The assets that you want in your life

are appreciating assets like stocks and bonds,

and real estate, things that tend to go up in value.

While a car is technically an asset,

most cars are depreciating assets

meaning every single year they are worth less and less money

and if you make this mistake of going out there

and buying a brand new car or buying an expensive car

you're gonna end up upside down on that car

to the point where basically how much you owe

is more than what that car is actually worth

and you're gonna be stuck paying back this car payment

for years to come on a car that's not even

worth what you owe on it and it's just a really bad

situation to be in and I see so many

young people making this mistake.

Now you might be asking yourself

well how much money should you be spending on a car

and I wanna share with you guys what my opinion of this is.

So in my opinion, your total monthly vehicle expenses

including your insurance and including your car payment

should be no more than 10% of your pre-tax monthly income.

This is a pretty conservative number

but I can pretty much guarantee you guys

this is gonna keep you out of trouble

when it comes to your vehicle expenses.

So let's say for example you made

$5000 per month in pre-tax income,

that means that your total vehicle

expenses should be around $500.

So maybe it's a $400 car payment,

and a $100 for your monthly insurance payments.

Where you run into trouble is when you see somebody

with $3000 of pre-tax income per month

with a $750 vehicle expense a month.

It just does not make financial sense

and there are so many people out there

that are making maybe $30, $40,000 per year

driving brand new Ford F150s or cars that they just

can't afford and then they wonder why

they have no money at the end of the month.

Okay the third huge financial mistake that people are making

in their 20's is getting into debt with student loans.

Now I'm not saying that college is necessarily a bad thing.

I went to college.

I got a two year degree in Electrical Construction

and now here I am making YouTube videos

so obviously I'm not using my college education

but it cost me altogether $12,000

over the course of two years

and I was fortunate enough to have some money

from my grandfather that paid for college

so I was blessed to not have to go into debt

but even so, I went community college

to keep that expense as low as possible.

The problem you run into here is when people are going

to college for what I call, a non-marketable skill.

Something that is not very useful.

A degree that is not going to allow you

to make decent money and then you are in debt.

In some cases, six figures of debt

with a degree that's not gonna earn you any money.

It just doesn't make sense to do this.

One of the things I frequently talk about on this channel is

getting involved with skilled trades,

whether it's being a plumber or an electrician

or a carpenter, these are skills that don't require you

to go to college or go into debt

that are going to allow you to make a lot of money.

But at the end of the day, the number one thing,

the most important piece of this is

you're doing what you are passionate about

and if you don't wanna be an electrician,

obviously don't do that but I always recommend

if you're going to go to college,

at least have some kind of plan

as to what you're gonna do after college

and how much money you can make with that degree.

One of the things I always like to say

when I'm talking about looking at the trades

versus looking at college is let's say it's midnight

and all of a sudden you find out

you have a burst pipe in your basement,

you're gonna be calling a plumber,

you're gonna be going oh shit, I need a plumber.

You're never gonna be in a situation where you go

oh shit I need a art history major.

It's just not a skill that's gonna be in massive high demand

and so it's just something that people don't consider

is the demand and the need for that service.

Again, plumbing is not for everybody

but it is a skill that is in high demand

and when you need a plumber, you really need one

and that's when you're gonna be opening your pockets

and shelling out some dough.

Financial mistake number four, I know it's going

to get me some flack in the comment sections below

but I just have to say it, I have pets myself.

I have two cats named Ava and Stormy,

I'll put up some photos on the screen here for you

but pets are one of the biggest financial mistakes

that people make in their 20's.

Like I said, I have two cats, I love them,

they're one of my favorite things that I own

and so I would never change the fact that I have two cats.

I really enjoy the companionship and everything

but at the end of the day, if you strip away

the whole emotional attachment to your pets

and you just look at the dollars and cents,

this is a huge expense every single month to be a pet owner.

Now I'm not saying that you shouldn't

own a pet if you really want to.

It's a very important part of your life

but you should consider the financial obligations involved

with owning a pet and a lot of people don't do this.

They end up buying a dog or adopting a cat

or adopting an animal thinking okay, you know what?

This dog's only gonna cost me $1000 or $500

and that is literally just the beginning.

I've ran the numbers here for what I'm paying for my cats

but I know just from owning dogs my entire life,

it is way more expensive then you think going in

especially when all you look at is the dollar value

you're paying for that pet at the very beginning.

So just for me for an example with my two cats,

every single month I spend about $25 on food,

$40 on litter for my cats, $120 per month on pet insurance,

now pet insurance, the one that I have it covers everything.

Shots, vaccinations, spaying, anything that comes up

it's covered and personally I would rather be paying for

pet insurance rather than having these unforeseen expenses

but you don't necessarily need to have pet insurance.

And then I also have to pay pet rent at my apartment

coming up to a grand total of $210 per month.

Now for me, that's really not that much money

but for some people that is a significant chunk of change

and it's something you need to consider

when you are buying an animal.

I would say for a general rule of thumb,

it's gonna cost you about $150 per month for a pet

and you also have to consider if you're not

gonna go the route of getting pet insurance,

there's gonna be those unforeseen expenses along the way

and you should really be planning for those

that way you don't have to end up

putting it on a credit card but that can be

a huge financial burden for people

is buying a pet when they're not thinking about

the long-term costs of owning that animal.

Alright and finally number five here,

the fifth huge financial mistake young people are making

it's a mistake that I almost made myself is avoiding risk.

Now I know this might sound kind of weird to you guys

because you might be thinking,

risk, maybe you're thinking of the lottery,

maybe you're thinking of, I don't know,

something you're gonna lose money

when you're risking your money,

but risk can be one of the greatest things that you can do

in your life is risking something.

Risking the time that you're putting in something,

risking your money and I'm not talking about

the lottery here what I'm talking about

is something that comes up in your path

that might not necessarily seem like the right thing to do

on paper but you decide to do it anyway because you have

all the years ahead of you to offset that risk.

And I wanna share with you guys my story about that

to show you what I mean by this.

Like I said, I went ahead and I got my

two year degree in Electrical Construction.

I worked for the local power utility for a little bit

over two years and I honestly hated my job.

I did not enjoy what I was doing day to day

and so on the side I started this little YouTube channel.

I was making videos in my room,

drawing stuff on a white board,

making financial videos and I really enjoyed doing this

and I said you know what, I would absolutely love it

if every single day this is what I did.

I put together ideas on paper,

I made YouTube videos, that would be a lot of fun.

But I looked at the numbers here

and I said okay at my job I'm making,

I was making about $60,000 at the time

and when I was looking at my YouTube channel,

I was making less than $1000 per month.

So financially, looking at those numbers,

it would make absoluty no sense

to quit a union job with great benefits

earning 60k a year guaranteed six figures within five years

but I made the decision anyway to say,

I don't wanna do this anymore and I went all in

with this YouTube channel and now I've scaled this up

to a really great online business for myself.

Had I been afraid to take that risk

and take that leap of faith, I would still be stuck

in a position doing this job that I really did not enjoy.

And so you can't always look at everything

as dollars and cents on a piece of paper.

You have to look at it as what are you going

to enjoy doing at the end of the day,

and do not be afraid of taking some risks as a young person.

Avoiding risk is in my opinion,

a huge financial mistake that people are making

and it's one that I almost fell into myself.

But anyways guys, that's gonna wrap up this video.

This is what I believe to be the five biggest

financial mistakes to avoid in your 20's.

Drop me a comment down below if you guys have made any

of these mistakes or if you have any to add to this list,

I would love to hear what you guys have to say.

Thank you so much for watching this video.

I hope you enjoyed it and I will see you in the next one.

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