The most obvious answer that most people come up with when answering this question is that younger people are less experienced with finances and are therefore greater financial liabilities. Therefore,  the insurance company has to charge more money to reflect that fact. In fact, both age and gender play a role according to an article published in Forbes: “Young people between the ages of 16 and 25 have some of the highest insurance rates, and young males pay much more than young females.

This example of insurance premium costs and their association with risk-taking behaviours should act as a good model for what behaviours characterise and surround bad financial decision-making. What I mean by that is that the riskier your financial strategies are, the more of a liability you will be on average to both yourself, the people around you, and financial institutions. Here are some major ways to avoid putting yourself in that situation.


Budgeting is the most surefire way to turn around a financial disaster with just a few months of time – depending on what kind of situation you’re in. If you want to think about it another way, budgeting allows you to visualise all of your spending habits and – if you’re doing it correctly – be more conscientious of how you are spending. It’s easy to start, just get any online budgeting program and start keeping track of your payments. As long as you’re on top of it the program will do the calculations and mathematical heavy lifting for you so you can focus on making the right financial decisions.

Prepare Your Own Meals

This is one of the things that everyone knows, but that people don’t always bother to do. Everyone knows that getting a steak, spaghetti, or pizza at a restaurant or delivered costs more than the ingredients and labour that go into making it as well as the fact that cooking is a skill that most people can easily pick up. But did you know that the popular trend of “meal prep Sunday” can actually save you both a lot of time and provide you with delicious meals that only cost cents or a couple of dollars each?

Don’t Splurge on Luxury Items

If I were to make a good analogy for how bad spending copious amounts of money that you don’t have on things that you don’t need to survive is for your wallet, I would compare it to driving while trying to text and being drunk at the same time. A report from The Economist reveals that luxury items and brands are no longer necessarily looking for exclusivity, but that they are willing to sacrifice part of that exclusivity to capture a larger market share. Don’t fall for it.

Pay Attention to Your Credit

Not paying your debts on time or even worse – getting a charge off – can be one of the worst things to happen to your credit and to your finances in general. If you find yourself in the unfortunate situation of having to deal with issues like bankruptcy or a large amount of charge offs, it’s best to contact professionals firms in order to explore your solutions. Lexington Law offers premium and specialised advice specifically geared towards getting you out of hot water or even keeping you up to date on the latest trends regarding how credit changes.

Avoid Giving Large Amounts of Money to Family and Friends

This is probably one of the simpler tips to understand, you absolutely do not want to give friends or family money that you cannot afford to give out regardless of your relationship. In fact, it’s because of your relationship that you’re likely not going to see that $50 for dinner or $5000 for a wedding ever again if you decide to lend it out. Consider the money you lend out to your loved ones to be gifts rather than loans because you will inevitably have a hard time collecting debts.

Be Careful Taking on Large Debts

Famous 20th century philosopher Noam Chomsky cautions: “It’s a trap for the rest of your life because the laws are designed so that you can’t get out of it. If a business, say, gets in too much debt, it can declare bankruptcy, but individuals can almost never be relieved of student debt through bankruptcy.” When people make their first big purchase like a house or a car, it’s easy for them to fall into a trap based on the initial terms of the loan or simply due to negligence on their own part. This negligence then snowballs or compounds into something unmanageable over time.

Avoid Drug and Violence Related Criminal Charges

It’s obvious that criminal charges will usually cause you a large amount of lost productivity. Criminal charges related to drugs or violence could result in spending years or decades in jail. Almost any alternative to the use of time is better than passively spending it in a jail cell. What is even worse is that even when you finally get out, your record stays with you and reduces your chances of employment, with the NYTimes noting that: “Men with criminal records account for about 34 percent of all nonworking men ages 25 to 54, according to a recent New York Times/CBS News/Kaiser Family Foundation poll.”