Personal Finance

When it comes to making mistakes involving money, we have all probably been there in one way or another. And, many of us might have been more prone to committing such mistakes during our youth. Fresh out of school and getting our first paycheck, we feel that the world is our oyster and we can do whatever we want.

If you are a young adult about to make your foray into the working world or have just done so, it pays to take note of these common mistakes young adults tend to make with their spending habits.

Impulse Buys

Often when young people go shopping without a list, they end up buying things based on what seems nice at the moment. The desire for instant gratification makes you buy what you want rather than what you need. Plan your purchases in advance so your pocket doesn’t feel the pinch.

Paying with Credit Card

Oh, the joy of getting your first Credit Card. We’ve all been there; you simply wish to go around swiping your card, don’t you? But, buying with credit instead of paying cash could potentially lead to overspending. By paying with a card, we are more likely to lose track of how much we are spending. After all, buying a S$10 item requires the same action as buying a $1000 item with a card, possibly reducing our own judgment when it comes to big expenditures. Paying cash will possibly increase your cautiousness when spending, alerting yourself if you are spending too much.

Not Budgeting

As the adage goes, if you fail to plan, you plan to fail. This has relevance to young adults’ consumption habits today. Many youngsters in Singapore these days grow up well provided for by their parents. This in turn reduces the pressure to plan for the future.

If you spend without planning and budgeting for the whole period, you could end up running out of money before we receive our next pay check. Imagine the horror when you realise you’ve spent your entire month’s salary within a week. Planning your expenditure (and savings) can make you more conscious of your expenditure.

Following the Global Consumption

In a pursuit to be in trend, many young people often get caught up in buying the latest devices. They justify the purchases with a multitude of excuses. More often than not, you end up in the modern Cold War electronic race, upgrading your iPhone 6 to iPhone 6S, even though your current device is working fine.

With new products turnover shortening, young adults get caught up in this consumption cycle, buying products because they are the newest and latest, rather than for their functionality. In short, buy only what you need.

Buying Cheap Goods

Who can resist a good ol’ bargain? We are drawn to sales and discounts and cheap goods (which we may not even need). We may buy a cheap S$10 shirt rather than a quality S$40 dress because the former seems more value for money. What we do not realise is that sometimes these cheap consumer goods may even entice us to purchase even more. We neglect the fact that these cheap goods sometimes have a shorter lifespan and we may end up spending even more.

Take for example, a pair of good quality shoes for S$50 versus a pair of shoes on sale for S$20. You may go for the latter, thinking it is more value for money. But then, the cheaper shoes may probably just last for a month while the more expensive shoes can go on for a longer period, years perhaps.

Now, we are not asking you to go for thousand-dollar designer shoes. Just take a moment to consider the lifespan of the product rather than just the price tag. Sometimes, the more expensive option can give you more bang for your buck.

Keeping up with a Glamorous Image

In our increasingly materialistic world, some of us have resorted to spending a fortune to keep up appearances. Sure, you are at the prime of your life and you want to look good in front of your peers. But, let’s not go overboard.

Though they earn less than the average working adult, young adults in cosmopolitan Singapore are huge spenders on luxury products. Often, these luxury goods take up a significant percentage of your pay. You don't need necessarily need designer bags and shoes to look good, spend that money on a gym membership or dance class, you can be fitter and look more attractive.