With the development of stock markets and other forms of asset markets, putting most of one’s income in a savings account instead of investing became a foolish practice. With e-commerce and technology, it has become easier for people without a sturdy capital foundation to make a fortune. Additionally, new lucrative career paths, such as being a small business owner or content creator, opened up as well. On the other hand, it has become much easier for people to get into financial trouble with easily-acquired loans, intense exposure to advertisements, the development of social media and society’s distorted economic concepts. However, just because it is common does not mean it is okay.
A common habit to reevaluate is getting large loans for life purchases like tuition, cars and houses. People should attempt to stay within their means and secure as few loans as possible. Although education is valuable and can potentially change one’s life, attending a school that is not affordable or worth the tuition is not an ideal decision. When choosing a degree, people should keep the career path they will take to pay off their loans in mind before they start getting in the way of life. Student loans have a high interest rate and take a long time to pay off. Even if one files for bankruptcy, student loans will remain unless approved to be completely discharged. If these loans are not paid on time, it could lead to legal action, credit score damage, financial instability and, in the case one had their parents co-sign a loan, can negatively affect their family’s financial standing.
The same applies to car payments. Although a car is a necessity in the United States, rather than a luxury like in other countries, one should not be heading to the dealer the moment after they get their driver’s license. Novice and student drivers should not get extravagant cars since the insurance payment tends to be higher due to the increased risk of accidents and recurring costs. People should also refrain from viewing cars as a status symbol and instead get a car where the monthly payment is affordable. People can think that the car payment is bearable when they initially buy the car, only to realize that they disregarded the additional fees (such as maintenance, depreciation, gas, taxes, interest, payments, parking and insurance) that accompany car ownership. Also, depending on the neighborhood’s safety, if a person lives in an area where public transportation is well developed and is safe to get around, they should use the public transportation system rather than chastise it. Public transportation is convenient, cost-effective and environmentally friendly, and we should not be getting ourselves into unbearable debt when we don’t necessarily need a car to get to where we want.
In the United States, people move out once they’re adults, and they seldom move back even after they graduate. Instead, people live alone or with a roommate in an apartment or buy a house with a high mortgage. Our society tends to view adults who live with their parents as poor or immature. However, there are benefits to living with parents that outweigh the potential shame that accompanies it. By living with their families, people can often save on rent and living costs while living in better conditions than some one-bedroom apartments can offer. This can allow them to save funds to eventually go to a down payment while staying closely in touch with their family. For people planning to get a house without a high down payment, living in an apartment can be beneficial to avoid annual property tax and spending money and time on maintenance. It also allows people to move to different places freely. Home mortgages have a high interest rate. Without a high down payment, it may take more than a decade to pay the loan off.
Another thing that should not be normalized is overspending. People should closely consider what they spend their hard-earned money on. We are influenced and affected by our surroundings more than we think, creating a trap many people fall into. We get easily persuaded into thinking we need a product that we didn’t know existed before viewing a subtle celebrity endorsement, forgetting to recognize that they received the product for free and get paid as a part of their job. We often perceive having extravagant things such as luxury products, cars, hobbies, vacations and houses proves that we are successful. However, having or not having something does not define you.
People who do not have someone to guide them financially are more prone to financial problems than others. It is important to remember that just because something is commonly done does not mean it is justified.