🌼90% of Young People Are Financially Broke for This Single Reason
Spoiler alert: It’s not the salary or the opportunities.
The other day I was scrolling my Tiktok feed when I saw a video of a “realistic payday routine” from a young girl in her 20s who earns $70,000 annually.
At first glance, I thought it would be a positive video in which she would teach me financial tips since the girl started paying her credit card completely until I kept watching all her payments and realized the big problem of the young population.
Here is the summary of the whole video:
“I got paid $2004.66 net. I still had a few hundred dollars in my checking account, so my total balance it’s $2,421. First, I always pay off my credit card in full, and sadly my bill is pretty high right now ($1,8881.76) mostly because I had to pay $500 for a hotel in Chicago since we were visiting some friends this weekend, and I also had to pay $700 to get my taxes done.
And that leaves me with $539, not enough to put anything into savings and also not enough to put anything aside for my big bills like rent and my car payment that are coming up. I will probably have to take money out of my savings to cover my expenses for the next couple of weeks but don’t worry about me because I gave up on all my financial goals long ago.”
What shocked me the most about all those wrong things is that 90% of the comments said, “finally, someone is making a real video about finance,” and “I love that I am not the only one.”
But this is the reality. Almost 90% of people in their 20s are broke. More than 50% of them receive help from their parents, and almost none of them have savings. According to another research, millennials between 22 and 30 have an average net worth of -$20,000 (yes, negative).
And many of them even earn well. The problem is one single reason: They don’t want to wait until they’re stable enough to pay for a lifestyle.
86% of young people are financially broke because they don’t understand they can’t afford their life.
Young people don’t know how to prioritize their earnings. They focus on immediate pleasure and easy life. Also, they don’t understand the value of money.
The young girl in the video spent more than 1/4 of her net salary (539 dollars of her 2004 paycheck) for a two-night luxury hotel “to visit some friends.” And almost half of her paycheck to “get her tax done.”
She could have paid something more modest that was within her budget range if she needed to make the trip, and taxes are a task that she could have done by herself with tools that give you the exact same number for free on the internet.
But she decided to throw away two weeks of hard work for two nights and a few hours of not doing math.
The problem is not to travel and have fun. It is that you must know when you can afford a type of life.
A salary of $70,000 is excellent, much more than average. It can allow you to save and invest comfortably while still giving you certain pleasures and even having a family.
However, if you don’t know how to manage yourself well, you will never achieve greatness.
I know many people with a salary of less than $60,000, and they travel, go out with their friends, and can also save to buy a house.
However, if you never put in your mind that sometimes you have to sacrifice certain pleasures that you cannot currently give yourself, you will always feel that “you will never be able to achieve your financial goals.”
The wealth of the future depends on the sacrifices you can make in the present.
Wealth is about making certain sacrifices, and they don’t have to be not doing anything you like because “you have to save,” but working smart with what you already have.
If you have to pay rent or your car, find a way to learn how to understand your taxes. If you can’t learn to do it or find it very difficult, then postpone your trip for later.
But don’t try to be a superhero and want to have everything when you know you have more important things to pay for later because you will be in debt forever.
There will always be a birthday, a trip, or bills to pay. If you always say you’ll save later because now you want to do it all, then you’ll never make it.
The wealth that you will have in the future is about the things that you decide to prioritize in your present. And you have to be able to understand what is most important to you, a single overpriced hotel trip for a weekend or financial freedom in your 40s.
Having a luxurious life is not bad as long as you have a balance and prioritize what is really worth it.
I love luxury. A good restaurant, trips, and buying myself what I want it’s something that I enjoy. However, I will never prioritize those things over my financial well-being and future.
No matter how good a restaurant is or how much I like a handbag, it will never be better than being able to retire and live a comfortable life while I’m young later on.
I don’t want to work all my life, and knowing that, I will never prioritize immediate pleasures over my financial freedom.
However, I still travel twice a year, go to events with my friends, and pay all my bills and credit cards on time (and I don’t have a 70k salary yet). The trick is to have a balance between what I can afford to pay at the moment and what I want to achieve in the future.
The balance of paying for one thing at a time is what has kept me stable, and knowing this, I have been able to achieve great things.
Most young people in their 20s are broke because they don’t understand they can’t afford a lifestyle.
They earn a good salary but decide to move to a luxury apartment because it has a window and a pool. They don’t have money to pay the car insurance, but the restaurant bill last Friday was $150, and they have to pay $700 to have their taxes done every year, but they don’t take time to learn it from a $50 course.
If you understand your current limit, work to control your lifestyle, and have a balance (even if that means giving up certain luxuries for a month), then you might be able to save each month.
But don’t spend all your payment in 48 hours and then complain online that you don’t have enough to pay your important bills because the fault is not the government or the system; it is you.
Contributed by Desiree Peralta
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