Financial habits in your 20s that will get you poor by the time you hit age 30

Financial lessons are necessary for someone who is in his 20s such that by the time they hit age 30, they have something – in wealth or asset form – to look back and be proud of.

20s are among the most challenging human ages because many in this bracket would want to have fun, save a lot of finances, establish meaningful relationships, support their families (if they are among the first children in sibling hierarchy), acquire tangible assets and moreover adopt a lifestyle that would leave many peers admiring; all that requires money which many twenty-something-year-olds do not readily have.

Sadly, when they get a job that pays them quite well (which is relative, but I am talking about a monthly income of KSh60, 000 and above), they tend to forget all the ambition that they once had and resort to blowing up the hard-earned money on alcohol, expensive get-away packages, meaningless relationships, wasteful possessions among other ineffectual projects.

Are you fresh out of college and was lucky to land that job that pays several thousands of shillings every month? Don’t be excited yet. Sit down and budget on all responsibilities that you’d face. You would realise no amount of money under a monthly income of KSh1 million is enough (and that is when one has no bank loan that he is servicing).

However, the most important thing will be to point out some of the habits that twenty-something-year-olds often engage in – and give meaningful advice that would guide them toward thrifty habits (please note: not stingy habits).

Lack of proper planning

Centonomy founder Waceke Nduati says instant gratification looks more appealing to young people than what they term the ‘mirage’ of planning and saving.

“I think young people have learnt that success and wealth is having a nice car or a nice phone but when you sober up, you realise if you continue living this lifestyle means you have to keep working very hard, earning a lot of money but you’re using up that money just to buy something else,” she said.

Waceke attributes such impulsive habits and lack of a thought-out financial blueprint to the perennial reliance on salary and loans by young people. Sadly, the money is used to finance a lifestyle and not wealth creation.

She has advised the youth to tap into wealth creation ventures so as to secure a stable financial position that can help them maintain their ‘hefty’ lifestyle choices.

“There’s a lot of focus on consumption rather than wealth creation,” she said.

Being quick to take loans to fund lifestyle

This point is closely tied to the first, but Waceke was more particular saying that the habit of people in their 20s rushing to banking facilities to apply for loans so as to lead a lifestyle similar to their peers is quickly gaining impetus. And sadly, when the twenty-something-year-olds hit age 30, they end up servicing accumulated loans over the years.

“Once young people are overwhelmed by large debts, they will want to do crazy things to earn a lot of money so that they can get out of the problem that they had created by themselves. I advise them to lead an honest lifestyle that won’t expose them to huge debt load,” said Waceke.

Blowing up money on friends because you don’t want to disappoint them

No one would want to disappoint the people that they love and truly care about. But what happens when you are too generous to an extent you are digging your debt grave deeper and deeper?

Well, as harsh as it may seem, you may have to whittle down your list of friends; and first begin by axing those who look for you only Fridays so that you can buy them booze.

Beyond the Limits author and Residual Income Coach, Paddy Jayson Mwangi, advises the youth to make a list of meaningful friends who give lots of financial incision.

“We are too diplomatic when it comes to our friends but we should be able to differentiate between diplomacy and being a true friend.  As a good friend, I should be able to ask you whether you are sticking to your budget when I see you overspending,” he said.

Being too comfortable with income from one source

Waceke Nduati uses the term ‘microwave society’ to describe a society that is so used to depending on the normalcy of the world instead of branching out and building something else on the side in order to sustain desired lifestyles.

“If you want to do something on the side, you can create a different source of income in order to sustain the lifestyle that you want,” she said.

By doing so, people are able to sustain their lifestyles and still make money on the side, instead of bombarding the monthly salary on all desired lifestyle wants.

Poor time Management

Learning to plan your time could actually save you a lot of money.

This may go hand in hand with planning in the sense that you choose to perform constructive activities as compared to engaging in activities that will force you to spend money unnecessarily.

You can decide to take a Centonomy class so that you can learn financial management skills.

You could also choose to forego that clubbing activity that looks fun – though unnecessary – and save that money so that you can advance your education. There is no harm in investing in education, if not tangible assets.

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