Financial literacy is something that isn’t taught in schools, which is one of the reasons why so many young people graduate from college without a solid safety net or a strong understanding of how to manage their money.
Lillian Chan She uses social media to help other people in their 20s level up their finances and careers.
The financially responsible 23-year-old explains three reasons why people in their 20s struggle with money.
1. Living Beyond Your Means
At the top of Zhang’s list was living beyond his means and spending money he didn’t have.
“I think that’s really emphasized, especially on social media, because you’re not just looking at what your friends or people at work are doing,” Chan said, referring to the negative effects of comparative culture.
Scrolling through social media gives us a glimpse into other people’s lives, but it’s easy to forget that what we see on Instagram isn’t necessarily their true life, but rather the facade they present to the world.
Chan stressed the importance of saving as one’s income increases, saying, “Many people’s standard of living improves as their income increases, but they don’t increase their savings. As a result, many people with six-figure incomes run out of money before payday.”
2. Purchasing with Credits
Chan believes services like “buy now, pay later” leave many young people in debt because they spend money they don’t actually have.
“I know a lot of people use their credit card every now and then to buy necessities, but I think that can lead to a dangerous path of debt,” she explained.
She advises avoiding services that will put you in debt and to “only buy things you can pay for in full.”
Taken at face value, this advice sounds solid, but it overlooks the possibility that urgent financial situations may arise, like how to cover emergency medical expenses or what to do if you need a car to get to work.
The reality is that most people on moderate incomes only need one emergency to wipe out their bank accounts, and this is less a matter of personal responsibility and more a problem with the structure of our society.
3. Using savings to justify spending
“People say they’re going to save a certain amount of money, they put it aside and then they say, ‘I’m not going to touch this money unless there’s an emergency or I’m saving up for a big purchase,'” Zhang said. “If you withdraw the money as an excuse to spend it on unnecessary expenses, it literally defeats the purpose of saving money.”
She believes that withdrawing funds from savings accounts “puts a lot of people in a vicious cycle of not having enough money.”
“If this isn’t possible, I recommend putting your savings in a separate account that’s not connected to your checking account and that you don’t touch,” she says. “Just pretend your savings aren’t there.”
Chan’s financial advice for people in their 20s is good, but it doesn’t take into account the reality of the world we live in, where stagnant wages, inflation and rising costs of living make saving impossible.
Many in the comments section expressed the view that bankruptcy was not a personal decision but rather a result of the overall economic and societal situation.
“This is all solid advice, but I think the reason most people in their 20s are struggling financially is because wages are staying the same while the cost of living is skyrocketing,” one person said.
“Firstly, I hope I can find a job that pays a livable wage,” said another.
“Just by being alive you are living beyond your means,” said another.
While personal responsibility and understanding one’s financial situation can go a long way, it does nothing to counter the structural inequalities that hold people back when it comes to achieving economic security.
Alexandra Blogier is a writer for YourTango’s news and entertainment team. She covers all things related to social issues, pop culture, and the entertainment industry.
