The 20s, being a transition period from young adults to mature adults, is marked with unmatched energy, zeal to move ahead and prove one’s point to the world. This is also the time when you start understanding the responsibilities ahead in life and owning up to them. You are ready to take up challenges, but sometimes struggle on how to face them and achieve your goals. You may lack experience and may be in a hurry to take hasty decisions which might have adverse effects on your future. Handling finance is one of the important aspects where the youths in 20s are more likely to falter.
Here are five common money mistakes that you should avoid committing in your 20s to save yourself from the vicious money trap.
Table of Contents
Not choosing the right course of education
Choosing the right stream of education is one of the factors that determine your future on the professional front. Education doesn’t come cheap and college could be your first fruitful investment. If you are spending a decent amount of money towards your education, then it should also reap maximum benefits in your life ahead. Hence, it is usually advisable to choose a career considering your interests and talents. Your educations should in fact materialize into stable career and sufficient earnings. The better the initial salary or earnings, the more potential it has to grow further.
Deferring student loan
It is always better to pay off the student loans, if any. Though sometimes it seems lucrative to keep pushing payments till you have enough money to pay off, but in a way debt burden also keep increasing. The sooner the college loans are paid off, the easier it gets to plan the next financial phase of life.
Not creating a budget
If you are not planning a budget, you may overspend and even succumb to debts. There is nothing so complicated about creating a budget. All you need to do it to analyse the inflow and outflow of funds and accordingly allot funds to different categories such as house rent, transportation, utilities, groceries, etc. Similarly, you should also set aside an emergency fund for unforeseen expenses such as an illness, repairs or unemployment.
Surviving on the credit cards
If you have a source of income, then it is quite likely for you to own credit cards. Well, credit cards can pull you out of emergency crunches, but can also land you in financial trouble. More so, when you are unable to pay off the bill on time, make minimum debt payments or keep on borrowing cash against credit cards. Instead of letting the plastic cards lure you, think whether you can postpone your purchase or is there any better and cheaper way of arranging the money.
Not taking an insurance
People in their 20s think that it is too early to invest in an insurance policy. Either because their parents are still self dependent or perhaps they are not married or don’t have children yet. Nevertheless, an insurance policy is certainly a sound investment. Insurance can safeguard your family against major illnesses, life threatening diseases, accidents, death or other unexpected circumstances like losing a job..
Though many think otherwise, the 20s is one of the best times to plan your finances and investments. Avoiding the above mentioned money mistakes and planning judiciously at this age can ease your financial worries at the later stages of life.