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We all make mistakes, but if you can, you should try to take a little financial advice from those who have already paid the tuition in the school of hard knocks. If you can avoid falling into these five financial traps, you will find it easier to build a more balanced and affordable lifestyle.
1) Getting into Debt Early in Life:
As you enter the workforce and start earning real money, you have the option of following one of two paths. You can start living within your means and building up your  net worth or you can pile on the debt in the expectation that you'll be able to pay it off later. When you're in your twenties, this fork in the road doesn't seem like it's going to have any long term consequences. But as the years go by, you'll discover how big an impact it has on your financial well being. After you get a job and cash your first paycheck, stay out of debt and try to pay off those student loans as quickly as possible. It's alright to accumulate debt when you're going through college - it's probably the best investment you'll ever make and if you need to borrow, by all means do so. But limit your borrowing to a reasonable amount.
2) Waiting Too Long to Invest:
As we have discussed before, if you start investing in your twenties, you'll get a lot further ahead than if you start in your thirties. Most young people feel that they don't have enough money to invest and that there have other more urgent priorities. Do yourself a favor and start investing within months of landing your first job, even if its only a few hundred dollars.
3) Investing Too Conservatively:
The media is full of storeis about people who overconcentrated their positions and lost all their money on a single stock. True enough, that is a big mistake. But a far more widespread issue is one that plagues many people who think they are playing it safe. Even when they have time horizons that span twenty plus years, they tend to invest in financial instruments with limited returns to avoid the risk of incurring losses. If you do that, you're guaranteed to lose the battle against against inflation. Invest in a well diversified portfolio of high quality stocks that will yield 8 to 12 percent over time.
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