Money Traps to Avoid in Your 20s – 2020 is one of those years that’s going to be remembered in history for centuries to come. It’s not just about the pandemic but how the world reacted, especially the central banks. Central banks all across the world printed unbelievable amounts of money. Just in 2020, over 9 trillion dollars were thrown into the economy.
Almost half of the existing money was created since the beginning of the pandemic, which clearly should have created hyperinflation, but experts told us that’s not happening. The truth is that inflation has hit a record high since 2020, and now people like Jack Dorsey are saying – Hyperinflation is going to change everything. It’s happening! He is not a random guy. He is the founder of Twitter, one of the largest tech companies in the world, and the CEO of Square, a financial payments company. And he is not alone. Multiple experts have already warned about the coming hyperinflation. While I don’t believe in it but judging by what’s happening, it could happen!
People don’t understand how devastating it could be! It’s not another crisis like a pandemic. The moment people lose faith in the dollar, it’s the end of the dollar because fiat money is not backed by anything except our belief in it. Just take a look at what happened in the Weimar Republic after the first world war or Zimbabwe in 2006. The truth is, individually, we can’t change that. But what we can certainly do is take better care of our money. While inflation is still around 5 percent. You have to save as much as possible to purchase assets that will rise together with inflation.
5 Money Traps to Avoid in Your 20s
We are going to take a look at 5 money traps you have to avoid in your 20s because if you do not, you will never become financially free!
Unless you have been living under the rock, you probably watched or at least heard about the squid game. It perfectly illustrates humanity’s will to find a quick way to prosperity, especially when they are desperate. There is something in the back of our minds that tells us that there is a shortcut to wealth only if we just bet on the right team or the right horse or whatever it might be. But the truth is that, at the end of the day, it all comes down to luck.
And chances that you will be lucky could be on one a thousand or one a million or one in a hundred million. This means the vast majority of people are going to lose in this game so do not ever choose this path as your way to create wealth no matter how sweet does it looks. Real wealth takes real effort and real-time. The case with GameStop perfectly shows our will to gamble our way to the top. It was a risky bet. Although the hedge funds made a terrible mistake, it was clear that this bubble was going to burst at some point. Of course, the people who held the stocks, in the beginning, did make a lot of money. Others jumped in when it was at an all-time high and lost their lives savings without really understanding all the risks that come along with it.
2. Sacrificing your future for the sake of today
This is the most common financial trap that most people fall into, especially young people. We want to enjoy life today and not 5, 10, or 20 years from now. Merely the idea of enjoying life when you are old sounds so dumb that why even consider it. I agree with you, but the problem is that life is set in such a way that you are either going to enjoy a little bit today or enjoy a lot later in your life. I am not a fan of sacrificing the present for the future because life is now and not tomorrow, especially 10 years from now. If you can’t enjoy the present, you won’t be able to enjoy the future, especially when you are not guaranteed to live till that future.
However, enjoying life isn’t just about spending money. You can perfectly have fun with friends while not spending a lot of money. Just remember your childhood, you use to have a great time with friends while not even having a dollar in your pocket. At least that’s how my childhood was. My parents never gave me money but I still had a great time with friends. It’s your perspective, the way you look at it. If you are used to satisfying your urges by spending money, then that’s something you should work on.
3. You stop learning how new technologies work
This is a very common mistake people make as they get older and that includes me as well. As we grow and get elder, we start paying less attention to new technologies. It gets difficult to push yourself to use them. I am trying to push myself to learn how Tiktok works, but I have been pretty unsuccessful so far. The problem is that the world is constantly changing, especially in the last 50 years.
And wealth is shifting from one generation to another. How many Rockefellers, for example, are there on the Forbes list? Not many! And nowhere close to the top of the list! The family who inherited the wealth of the richest man in America who had a net worth of 400 billion dollars adjusted to inflation are slowly losing their fortune, and yet this drops out from Harvard (Zuck) worth 12x more with 121 billion dollars because one kept living on his fathers success while the other took advantage of this new invention called the internet. So if you want to keep making money, you have to keep learning, always be curious! In the last 10 years, youtube and Instagram have been booming, but today other platforms are taking over such as Tiktok. We have entire new industries like crypto that are growing exponentially.
4. Not being patient
One of my weaknesses is that I am not a patient person. This is something I realized in myself since I was a kid and I have been working on myself since then. But what I realized is that whenever I am patient, things turn out to be way better. You are investing, and things go down. All you have to do is wait and things will get better. Because ups and downs are normal in the stock market, but a lot of people pull out. Think of bitcoin recently. It has plummeted significantly, and recently it crossed a new milestone. That doesn’t mean that just because you are waiting, it is going to grow, but if your investment is based on real analysis that proves that this particular asset is worth a certain price, then you should not worry about it. Buy and forget about it.
Or when it comes to buying something expensive. You just feel the urge to swipe that credit card and get that thing as soon as possible, but the next day you realize that you are perfectly fine if you haven’t bought that thing. So if you have been a little patient, if you went back home and slept on it, the next day you would have changed your mind and saved yourself a few hundred or maybe a few thousand dollars. But it’s really difficult since we are living in this consumer-based economy where our lives move forward by spending money.
5. Investing all of your money
The feeling when you just start investing is awesome. But when you discover the concept of inflation and look at your money, you feel so bad that why your 10K dollar that you barely saved are sitting and losing value over time, especially when we have record-high inflation. I feel you! I have the same feeling when I look at my savings. But the truths are – life is unpredictable.
Things could be great today and horrible tomorrow, and if you don’t have enough cash at your hands, you might end up getting into debt that will cost you much more than what your investments could generate, so it’s always better to have an emergency fund before you start investing. Figure out how much you spend per month and make sure you have at least 3 to 6 months of savings always stashed in your account and invest the rest. Yes, this money is going to lose value over time, but you never know what’s going to happen a year from now but what you can know for sure is that you are ready no matter what happens. But before you start investing, you should at least know the basics of the stock market.
I get it it’s not easy, especially when you are just starting. You have a million questions. Don’t worry! I get it. I was once in your position. And to answer all of your questions, I have created a course that simple, straightforward, and fully animated. I have answered almost all of the questions you have in your mind. I strongly recommend it if you are serious about investing.