Managing personal finances is much more difficult than it sounds. In the 21st century, while people are earning more, they are also increasingly spending. From not having enough savings to frivolous expenditures, in this article we look at the top 5 personal finance mistakes, which should be avoided.

Why Young Professionals end up making Personal Finance Mistakes?

Imagine you have just finished your College. You have been handsomely placed with a multinational corporation. You are earning a lot of money every month. You suddenly feel the urge to spend on things and buy things, which you did not have growing up.

We are talking PlayStation, exotic holidays, Michelin star dinners and a whole lot more. Within a week, you find that you have nearly exhausted your entire paycheck. What are you going to do?

Most people make the mistake of using credit cards and maxing them out. The result?

You start a vicious cycle of debt very early on in your life. It is important that everyone should have a grip over how they are handling their personal finances. You should try to avoid debt at every stage of your life.

In the next section, we are going to look at five mistakes relating to personal finance and debt, which young professionals make.


Carina Advisors List of the top 5 Personal Finance Mistakes to avoid

1. Not making a Monthly Budget for your expenditures-

Preparing a monthly budget does not only help plan spending, but also brings in discipline. Making a monthly budget gives you an idea about what is an essential spending area, and what, is a luxury.

For example, rent, groceries, transport may be part of your necessary spends. While buying a lazy boy, or eating at that newly, opened restaurant down the street might be a luxury.

2. Misusing your Credit Card-

People should always think of a credit card as an avenue to be used during emergencies. However, in present times, it becomes our number one go to spending spree. It is necessary to avoid turning our credit card usage into a habit.

You should avoid cashbacks, extra points, frequent flyer points, lounge access and other discounts, which credit card companies use as bait.

3. Not Investing in Small Savings-

No matter how much we earn, if we are disciplined about our spending, we will start saving. It does not matter how much you save. The aim should be to inculcate a habit of saving. This can help you later in life as well as act as a source of tax benefits.

Every saving needs to have a goal. It can be the fancy one-BHK you have been eyeing, or the car that was always your dream. Start small when it comes to savings and you will see results.

4. Not having the right Financial Advisors-

People feel that having a financial advisor is only the luxury, which the rich can afford. This is not the case. If you have been struggling with a debt, a financial advisor can help you overcome it.

Carina Advisors, one of the foremost experts on the domain states that there are various ways to handle debts. They point out that the intent should be to make it helpful for the client by offering them the lowest rates of interest for monthly debt payments.

5. Mistake of Overspending and having no Financial Goals-

At no point should your expenses increase your income. If that is the case, you are in major troubles. It is necessary to set financial goals when it comes to spending, savings and investing.

There might be instances in a year where you might end up overspending. That is all right. The key is not to make that into a habit. Setting financial goals helps in preparing a plan.


When we are starting our professional lives, it is important that we control and check things early on. If this is not done, personal finance mistakes have a tendency to spiral out of control fast. It is necessary that we make some rules on personal finance.

By paying attention to the above five points, we can ensure that you stay debt free, start saving and bring financial discipline to your everyday life.

Can you think of some other mistakes that young people make when it comes to personal finance or debt? Mention them in the comments section below.