Money mistakes you’re making at your 20’s

Being in our 20’s marks a transitional period in our lives – getting out of college and getting a job; getting your own place; buying your first car; making a new set of friends and perhaps, pursuing higher education. It is a period where one realizes how ‘real’ life is. It is a life of responsibilities and independence, and sometimes it can be just confusing and intimidating that sometimes, we forget that we still have the rest of our lives ahead of us. Here are some mistakes that you can avoid while you’re still at it.

Not thinking about your retirement.
In your 20’s, it still seems so far away. But don’t make the mistake of not contributing towards it, unless you don’t want your retirement to be meaningful or worse, paying the debt you accumulated through the years. With as simple as taking away a small percentage every pay check, it grows slowly over time and will probably balloon to hundreds of thousands halfway through retirement.

Getting more than what you need.
It can be the end of season sale, or the clearance rack that is staring at you when enter a store. Sometimes, we are preoccupied by thinking of how much we can save from those items, that we don’t realize that we don’t even need them. We end up buying three trench coats because they are 70% off; however it is almost summer and we won’t have to wear them until next winter. Then guess what – you’ll still buy new ones come next year because they look and fit better, and the ones from last year are so passé.

Not setting up an emergency fund.
The main reason that these exist is that unexpected things happen. And sometimes, these unexpected things hit us the worst because we did not get to prepare, and that we could not have foreseen what the impact would be. Nobody is exempted from emergencies, and so it is always a must to have some extra cash that you can tap in case these things happen.

Relying on the plastic
Credit cards should only be used by those who know how to use them. As much as possible, use cash to settle your finances. Some people use their credit cards for points or rewards, which is great, if you can pay your expenses timely in full, all the time. Don’t spend money that you don’t have. Credit card debt can leave you penniless the day after pay day because of credit card payments that you made prior. And then, the cycle goes on – you swipe it again because you don’t have enough cash left to sustain you until the next pay check.

Going around with no goals
Another often overlooked habit, setting financial goals helps you to stay on track with your spending and saving. What would you like to do in five or ten years? Do you want to be a millionaire by 30? Do you want to retire and open your own business by 35? Having clear short and long term goals makes it easier for you to save a not spend unnecessarily. The mistake of not setting these goals could cost you the house you could have purchased, or the car you could have bought.

Welcoming your married life with debt
Everyone wants the perfect wedding, however, it’s just one day as compared to the rest of your lives as a married couple. For one perfect day, are you willing to spend the rest paying it off? There are now a wide variety of DIY wedding ideas that you can employ for your big day. Don’t spend all your money when you could save half of it for starting your lives together.

Thinking you are invincible.
While we are young, it is natural to feel strong and sickness-proof. However, it could only take one accident, or one infection that could send everything spiralling downward. It could lead to prolonged hospital stays, therapy, and medication that could have been covered by health insurance if you only got one.