Common financial mistakes
young people make when start working
Le Huu Nghi
Graduating
from university and receiving your first salary is an unforgettable moment. For
the first time, you feel financially independent. You may feel excited and want
to reward yourself after years of studying.
However,
this period is also when many young people make financial mistakes. Without
experience in managing money, it is easy to lose control. If these mistakes
continue for years, they can create serious financial problems in the future.
Here
are six common financial mistakes that new graduates and young workers often
make.
1.
Spending without a plan – Salary comes and quickly disappears
Many
young people receive their salary at the beginning of the month, but by the 20th
or 25th, they already have no money left. The main reason is not always low
income. It is often because they do not have a clear spending plan. They do not
separate necessary expenses (rent, food, electricity) from optional expenses
(shopping online, snacks, coffee, entertainment). As a result, they may need to
borrow money from friends or family before the end of the month. This creates
stress and financial imbalance.
Lesson: Start by tracking your income
and expenses. Money management requires discipline, not luck.
2.
Peer pressure and showing off on social media
Social
media can create a false image of wealth. You see friends traveling, buying the
newest smartphones, wearing branded shoes or luxury bags. You may start to feel
“left behind.” Some young people buy expensive phones or fashion items just to
keep up with others, even when their income is not high enough. In worse cases,
they borrow money or use all their savings just to maintain their image.
Lesson: Financial success is a
long-term journey, not a competition. Your value is not based on what you own.
3.
Emotional spending – not thinking about cost and benefit
Have
you ever bought something expensive because you really liked it, but later you
stopped using it? This is emotional spending. Many young people do not think
carefully about cost and benefit. They focus only on the price and their
feelings at that moment. They forget about opportunity cost – what else that
money could be used for in the future. An item may make you happy for a short
time, but if it does not bring long-term value, it may not be a smart purchase.
Lesson: Before buying something, ask
yourself: “Does this help me grow, or is it just a short-term desire?”
4.
The dream of getting rich quickly – investing without knowledge
After
earning money, many young people want their money to grow fast. They invest in
stocks, cryptocurrency, or Forex without enough knowledge. They buy stocks
because someone recommends them, without understanding the company. They
believe promises of very high profits, such as 30–50% per month. In reality,
investing without knowledge is like gambling. When the market changes, they can
lose all their savings.
Lesson: Investing is good, but only when
you understand what you are doing. Learn first, invest later.
5.
Misusing debt and ignoring credit history
Today,
it is very easy to get a credit card or borrow money through apps. Because it
is easy, many young people are not careful. Loan interest rates are usually
much higher than savings interest rates. If you do not pay on time, your credit
history will be negatively affected. A bad credit record can make it difficult
to borrow money in the future when you want to buy a house, a car, or start a
business.
Lesson: A credit card is a financial
tool, not free money. Only spend what you can pay back.
6.
Not having an emergency fund
Young
people often think, “I am healthy. Nothing bad will happen.” But unexpected
events can happen anytime: illness, job loss, broken laptop, or other
emergencies. Without savings, you may need to borrow money. Experts recommend
saving at least six months of living expenses as an emergency fund. This money
is not for investment. It is your financial safety net.
Lesson: Financial security comes from
preparation, not from luck.
v Final message for students and young
workers
When
you are young, you have Human Capital – health, time, and energy. But
you have limited Financial Capital – money and assets. If you do not
turn your hard work today into savings and investments, you may face financial
difficulties later in life when your energy decreases.
Personal finance is not only for
rich people. It is a basic life skill that every student should learn early. Start
with simple steps:
- Track
your spending
- Live
below your income
- Save
regularly
- Learn
before investing
Youth
is the best time to build a strong financial foundation. Small mistakes today
can become big problems tomorrow.