Being a young professional is an exciting period in one’s life. It is a time of self-discovery and of getting grounded.
One must learn to strike the balance between having fun and taking responsibility. Some move to a place of their own.
Thus, they start to accumulate life skills and gain more independence.
An aspect that young professionals need to work on is gaining financial literacy. Having your own source of income could be exhilarating.
It seems that you would want to do so many things with your hard-earned money.
As you trudge the path of handling your finances, here are some myths you need to get rid of.
Myth # 1: Enjoy Now, Invest Later
It is easy to succumb to a carefree life. This attitude becomes more distinct when you have a big financial cushion. You may have big savings or your job pays you well. Your goal centers on the idea of living only once.
Travel, food, and signature items become the norm. Investing is not a foreign thing for you. But, you want to put it off for later. It is not to say that you should not enjoy life. You still can and you must. But, investing earlier has many benefits.
For example, you can buy an affordable residential property early. This way, you can enjoy it as it appreciates. Putting off buying when you have the resources at present is time and money wasted.
You can even rent it out or plan for renovations until you are ready to live in it. Investing early in mutual funds lets you enjoy compound interest more. The simple formula here is the earlier you invest, the more massive wealth awaits you.
Myth # 2: Retirement Plans Is for Old People
The word retirement may seem like many years away. After all, you are only starting your professional life. But, it might take you by surprise as the years catch up on you. Saving for your retirement early is a very wise move.
Starting early means you still have lesser expenses and you can put in more to your retirement fund. Imagine when you want to start your retirement fund as you grow older. But, you would realize that it would not be that easy anymore.
When you feel that you are ready, you have responsibilities such as child care or education. Then, the burden of these expenses may prevent you from funding your retirement.
Take advantage of the time when you can put as much as you can into your retirement funds. Starting early may even help you retire early as well.
Myth # 3: A High-paying Job Is a Key to Financial Wellness
A high-paying job is not automatic access to financial wellness. Some young professionals fight their way to get jobs that come with many digits on them. They think that with these jobs, they can get quick financial freedom.
The truth is, high-paying jobs help to meet one’s needs and have a good breathing room for finances.
But, there is also a phenomenon called lifestyle inflation. For some, they increase their spending as their income increases. If you follow this trend, then any high-paying job will still not be enough.
Some young professionals have average incomes who seem to do better. Good spending habits are better markers of financial wellness than one’s salary.
Myth # 4: Being Financial Literate Means Having More and More Information
Overloading yourself with financial jargon will not turn you into a financial expert. Financial literacy takes no shortcuts. When trying to gain financial literacy, it is better to take it one step at a time.
Too much information may also cloud your judgment about making financial decisions. Not having a full understanding of a financial matter can make you decide on impulse.
Also, when you jump into the topic of financial literacy with too much gusto, you might get worn out at an early stage. Your brain can only process as much, giving it too much to handle will lead to disinterest in a matter.
Starting with small financial habits will build a strong foundation for financial literacy. Take bite-size information and apply it with consistency in your life. If you need to upgrade your financial knowledge, you can always ask for help from an expert in the field.
A young professional who wants to have financial literacy is off to an excellent start. With consistent practice, you will find yourself in a better financial position. It would be liberating not to rely on your paycheck alone for you to survive.
You would also have peace of mind that you have a safety net in case of any emergency. Setting misconceptions about handling your finances will help you grow in this area.