At the young age people make mistakes which are related with the future of their financial health. At that point in time, those financial mistakes look really small, but later on those mistakes prove quite costly. These mistakes are like spending every penny which is earned, no planning for retirement, not purchasing health insurance for any medical emergency etc. Now Money Dial would help you identify these mistakes for which you may want to plan in advance
4 Young age Mistakes that badly affect your financial health:
Not paying credit card bills on time:
In India young people can easily get credit cards from any financial institution. Initially, the card holder uses the card to its limit while ensuring the bills are paid on time. After few months, they intentionally or by mistake miss payment of one of the bills however they continue to use the cards in their daily use. This missed bill starts accumulating interest on it and at this point the credit card company demands payment along with interest and penalty. Instead of paying the bills, they leave the bill unsettled. But due to continuous reminders from bank and settlement offers, they make the pending payment of credit card bill. Story does not end here, after 5 – 10 years when the youth applies for car loan or home loan his application gets rejected based on poor credit score from CIBIL.
Purchasing term insurance at later age:
When you speak to any youth about term insurance, the simple answer would be no as they think they don’t need it. Term insurance means if you die in future then your family gets the due compensation ensuring there are no financial hardships with your family after you are gone. Term insurance of Rs. 1crore at the age of 25-30 yrs would cost you 4 to 6 thousand whereas if you purchase the same insurance at the age of 30-35 yrs with cover of 1 crore, your premium will be higher somewhere between Rs 10,000 to Rs 12,000/-.
Defaulter for education loan:
For higher education in India many students take education loan. Once their education is complete and are employed somewhere, majority of them ignore the payment of education loan equal monthly installments (“EMI”). This ignorance is due to change in address of his residential address to the city where the person is employed. Due to this difference bank is not able to contact the person and therefore marks the person as defaulter. After 10-15 years, the person applies for new loan to purchase home or car, but their applications are based as they are marked as loan defaulters at central agencies like CIBIL.
Lack saving habit while young:
At the time of education most of the youth usually get the pocket money from their parent which is quite a small amount. Once they are employed and start earning they are not bothered about saving initially and rather spend complete earnings on extravagant affairs like outings, dining out, unnecessary shopping etc. Due to such activities they spend every penny of what they earn. Later on when they get married and have kids, they need money to fulfill the daily needs of the family and therefore savings gets really tough at this point. Therefore, the only way to ensure you are financially fit for your entire life is to get into the habit of savings at an early stage while your expenses are less.