Updated: Mar 18, 2019
Young adults face a lot of issues when it comes to finances. While schooling has prepared them for a career, it rarely helps them with managing their money. And parents are often too busy dealing with their own money problems or are too focused on other parenting duties to teach their kids beneficial financial lessons. Because of this, I often see young adults struggling to monitor and manage their finances and starting off their adult lives already sinking in debt.
Fortunately, with just a little flexibility and education, young adults can break these patterns and create healthy financial habits that will serve them the rest of their lives. However, they will face some big obstacles along the way. One of the biggest is peer pressure from those who are closest to them. Friends, parents, and co-workers will often push young adults into making foolish financial decisions without realizing it. Most people still feel there is a ‘right’ way to adult after high school: go to a four-year college, get a good job, buy a house, start a family. Are you feeling these pressures? Here is some more information on the peer pressure you might experience and how to resist it.
Pressure to Buy a Home
One of the biggest misconceptions in the world of finances is that buying a home is a great investment. It’s actually a terrible one. Homes are not liquid, meaning you can’t pull money from them. They appreciate very slowly and there is always the need for extra expenditures. Most people believe that buying an expensive home and sinking all your money into it so you sell it and buy an even more expensive house is a smart move. The reality is you’ll be much better off renting a modest home or apartment or buying a duplex as an investment property and living in half of it while renting out the other half. Believe me, you’ll be much better off than your peers in the long run when you resist the pressure to buy a home before you’re ready.
Pressure to Buy a Nice Car
So you’ve landed that good job and you’ve got some decent paychecks rolling in. Time to get rid of that 10-year-old Honda and upgrade to a Beemer, right? Wrong. A car is an even worse investment than a home. If you’re driving a vehicle that’s already paid off, you can save hundreds of dollars a month that can be going toward debt or lucrative investments by not buying a new car. If you absolutely must have a nice vehicle for business purposes, consider leasing or wrapping your vehicle so you can write it off as a business expense.
How to Think Like a Business Owner
Young adults need to think like a business owner even if they’re low man on the totem poll in a huge corporation. Before homes and nice vehicles are purchased, debts need to be paid off and extra money needs to go place that generate money rather than suck it up. When you do this, you remain financially flexible and don’t get trapped in a job you might hate but have to keep to pay for your lifestyle. Though you may get pressure from your friends, they’ll eventually be envious when they see what a good financial situation your decisions have put you in.
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I love working with young adults who want to make good financial decisions and get ahead of the game. Have any questions or comments about what you’ve just read? Please leave them below!