Twenties can be a financially challenging stage: the tuition you pay during and often after your studies. To all this is added your uncertainty about your future and what you will do with it. So, it’s not surprising to see the horrific financial mistakes people make in their twenties. Here are 10 mistakes to avoid. Believe it, in ten years you will thank us.
Do not save money for your future and your retirement
This could be your worst financial mistake of your youth. When you graduate from college, retirement seems very far away. However, the reality is that you must start saving for the future, even if you generate a minimum income. No one can predict what will happen to you in the future or how the economy will behave. So, it is better to be prepared to ensure a calm future and a peaceful retirement.
Spending too much money on a car
Having the means to get a nice car is a very pleasant feeling. On the other hand, a new car is not a necessary purchase, besides that it can represent a big expense that some people are not quite able to manage. The fact that you have got a great job with a good salary does not justify buying the car of your dreams. With the addition of insurance and interest on the loan, you will end up paying more than you expected. As a result, savings plans will fall apart. A vehicle is a necessary purchase, but it should not threaten your future.
Do not have emergency funds
When you have to pay for rent, tuition, and auto insurance, creating an emergency fund can often take a back seat. However, this is just as important as other financial decisions. It is better to start early, before it is too late.
Living on your credit card
The credit card is not a source of income, which means you should not use it to live. Accumulating a serious debt on the credit card can and will, in fact, cause you a lot of financial trouble in the future. You will have to repay the debt over a period of years, which makes it impossible to save money and create an emergency fund. Do not use your credit card irresponsibly, as this will bring you into a situation you do not want to be.
Setting precise financial goals in your 20s is a brilliant way to accomplish what you want later in life. Even if you do not make a plan, make a budget, which will reduce your chances of mismanaging your capital. Take time to reflect on your financial plans for the future. So, when you are tempted to either go on an expensive trip or buy an expensive item, you might think of your financial goals and make a better decision.
Maintain the status quo
Maintaining the status quo can be a dangerous thing. The first job after college will not be as rewarding as you thought. You will have to pay back your university debt and the huge house, luxury cars and chic clothes will be out of your financial capacity for a few years. Attempting to compete with your peers can add to your debt and make your projects even more time consuming.
If, every month, you put all your money aside, then you should stop and start taking care of yourself more. Imagine your savings account and the emergency fund as normal bills. Thus, once the end of the month comes, you pay your bills and the amount you have left you spend it to take care of you.
Accumulating student debt too big for an unwanted bachelor’s degree
When in your twenties, it can be difficult to precisely know what you want to do with your life. However, if you are going to have to apply for student loans, be sure to think carefully about your choice of study. There is nothing worse than repaying student debt for an education you hated. There is no guarantee as to the usefulness of your education, but at least it will make the payment of the debt a little less painful.
Too much spending on marriage
It is true that your marriage will remain etched in your memory forever. On the other hand, it is better that you remember the beautiful moments spent at the wedding rather than the accumulated debt. There are many other ways to make your wedding memorable and affordable. Starting your life together with a debt is a bad start.
Do not have health insurance
When we are young and we have to manage our housing costs, food purchase and tuition fees, health insurance is certainly not a priority. However, it should. Paying a small amount each month for your insurance could save you the big bill in an emergency.
Financial management is a difficult task in your twenties. Sometimes it may be elusive, but you have to make your finances a priority. By building a good solid foundation in your twenties you will be more financially stable in your thirties and forties. Avoid the 10 mistakes mentioned above and you will benefit from better financial stability.