Story Details

20 Money Mistakes You Must Avoid in Your 20s

Posted By peronalfynance40 148 days ago on Finance - When I was in my 20s, I had a credit card and didn’t use it wisely. I ended up with credit card debt and although I paid it off, it was a lesson in knowing how to not manage money. I was also living for the moment rather than planning for a strong financial future. I had no emergency savings and I never thought about the benefits of investing. So in this post, I want to discuss money mistakes you must avoid in your 20s. 1. Trying to Impress Others With a Pricey College Education Some high school graduates feel pressured to attend a prestigious and expensive college. Maybe everyone in your family attended a certain well-known university and they’re telling you that you must follow the tradition. It’s okay to want to attend community college or not attend college and learn a trade instead. Student loan debt is hard to get rid of, and there are several careers you can enter that don’t require a four-year degree. 2. Not Having an Emergency Fund When you’re in your 20s, you’re so focused on getting the good-paying job and enjoying life that you don’t consider the importance of having emergency savings. You may not have a mortgage or kids to take care of now, but there are still emergencies you need to budget for. These include car repairs, medical emergencies, job losses, or unexpected expenses associated with living in your apartment. Establish and contribute regularly to an emergency fund. 3. Lack of Investing I had a fear of investing in my 20s, and I didn’t understand anything about the benefits of compound interest in growing my wealth. Now I would advise people in their 20s to start investing as early as possible. It just might help you retire early or pursue meaningful goals such as creating wealth for your future children and grandchildren. Start by investing in a few exchange-traded funds. These are baskets of different stocks that represent diverse sectors. Over time, you can include a few individual stocks. 4. Getting in Unnecessary Debt When you shop, it’s a good idea to ask yourself if what you want is a want or a need. Advertisers will do anything to convince you that you need their products in order to survive or be liked by others. Instead of using your credit card to splurge on expensive outfits, you can use cash to buy designer brands on clearance at discount stores or consignment shops. 5. Not Paying Bills on Time You want to have the discipline to pay bills on time to avoid late fees and other consequences. This is why you need to budget your income every month. Start by writing down a list of your most important expenses such as rent, groceries, and utilities. Also, write down the due dates so that you will remember when to pay certain bills. Cut out any unnecessary expenses. 6. Not Planning for Retirement In your younger years, you’re excelling in your career and your income is increasing by the year. But there will come a time when you won’t be in the workforce anymore, and you’ll need a financial cushion to get you through that period in your life. This is why you should open a retirement account and contribute as much as possible every pay period. One of the best retirement accounts is the Roth IRA. With this account, your earnings grow tax-free and your distributions are also tax-free. 7. Lack of Health Insurance Even though you’re generally healthier in your 20s, you want to have a high-quality health insurance plan that covers major medical expenses when they arise. The last thing you want is to have to ask the doctor about a monthly payment plan because you don’t have insurance. Apply for your state’s Medicaid benefits if you can’t afford private health insurance. 8. Eating Out Too Much When you’re a college student in your 20s, you might not cook a lot but instead eat out a few times a week. But those orders from GrubHub are costing you lots of money in the long run. This also applies to the many times you eat at restaurants. It is better to save money by cooking healthy meals at home. To help you with this, I’m including a post I recently wrote about 20 of the most affordable and healthy staples for your pantry. 9. Letting Friends Use You There’s nothing wrong with helping your friends, but it becomes a problem when they take advantage of you. You need to be able to say no without feeling guilty, even if this means losing friends. Genuine friends won’t disrespect your boundaries or willfully use you financially. TV court shows constantly have appearances from friends who sue each other because one friend chose not to repay what they borrowed. 10. Not Educating Yourself About Finances It’s okay to read the latest romance novel or action-filled comic books, but make sure you take the time to read books that will boost your financial literacy. When you read and research about money management, you position yourself for financial stability. To get you started, here is a list of neat personal finance books you can read. You can get these books at the library or from online retailers at a decent price. 11. Choosing A Career Based on Your Desires I want to start by saying that I’ve always loved writing so naturally, that’s the field I decided to enter. On the other hand, I also realize that I shouldn’t just choose a certain career path solely because it’s something I’m passionate about. Even as a writer, I’ve had to adapt to changing trends and work in sectors where the demand was higher. I started out wanting to work with traditional publishers at the major magazines, but eventually, I found that my best bet would be to work as a freelance writer with various online media outlets. Don’t just choose a career based on what you love. You have to think about whether there is a demand for it and if it will offer a decent salary. 12. Expensive Weddings Wedding costs have skyrocketed in recent years, but it doesn’t mean that you have to blow your budget on your big day. You can save money on your wedding dress by purchasing a nice white dress from a regular clothing store. Purchase a regular sheet cake from your favorite bakery instead of a big and tall one. Your relatives can take pictures for you. Cut your guest list in half by inviting only your closest loved ones. 13. Lack of Money-Saving Life Skills The pandemic showed us that there are times when we won’t have access to the conveniences that save us time and money. Many people had to learn how to cook for the first time since they weren’t able to visit their favorite restaurants. Since the hair salons and barbershops were closed, we had to style our own hair. If you’re in your 20s, now is the time to learn important life skills that will save you money. These skills include housekeeping, cooking, changing flat tires, decorating, and sewing. 14. Food Waste This mistake is the opposite of eating out too much. Maybe you cook at home regularly but you waste a lot of the food you prepare, which wastes money. I like to take any meals I cooked and place them in freezer containers or bags. I recently did this with gumbo I made. I stored the leftovers in containers and now I have something to eat on days when I can’t get to the store. Before you head to the store, take inventory of the food staples you already have. From there, plan your meals around those. 15. Marrying Before You’re Financially Ready While you can marry someone even if finances are not the best, it doesn’t always mean that you should. Before you and your partner get married, you want to have important discussions about how you want to build your financial future together. This will help you figure out if this partner is someone who is on the same page with you financially. 16. Paying Too Much For a Car It’s never a good idea to go into debt to buy a new car. The car doesn’t have to be a luxury brand or even a brand that is mainstream. You can purchase a used car with cash and save a lot of money. And if you pay for a used car with cash, then you won’t have to worry about monthly car payments. 17. Not Having Multiple Streams of Income One of the fastest ways to grow wealth is by having multiple streams of income, so when you only have one source of income, this could hinder your financial success in your later. In addition to your regular job, look for some good side hustles to supplement your main income. 18. Overspending on The Kids Most parents want to give good things to their children, but you don’t want to go overboard when buying things for them. It’s okay to buy your kids special gifts for their birthdays and Christmas, but you shouldn’t get extravagant toys every few weeks. Kids who have too many toys often don’t play with all of them, and it makes your home cluttered. 19. Unhealthy Lifestyle An unhealthy lifestyle can cost you money in the form of expensive medications, surgeries, and frequent doctors’ visits. One of the best financial decisions is to maintain a healthy way of life. Exercise regularly and eat plenty of lean meats, fruits, and vegetables. 20. Career Stagnation So you’ve worked with a company for several years, but now you notice that your salary hasn’t increased and there are not many opportunities for advancement. You know that if you don’t make career changes soon, you’ll be in the same position another ten years. Speak with your boss tactfully about working in more advanced positions with the company. Learn everything you can about the new position and be willing to work your way up. However, if you believe you’ve outgrown your current employer, start looking for a new job. Your 20s can be a time of incredible financial success if you avoid these costly mistakes.

The post 20 Money Mistakes You Must Avoid in Your 20s appeared first on Adventures in Frugal Living.

Submit a Comment

Log in to comment or register here