Your twenties are a tough time! You are in one of the biggest in-between periods of your life. You’re legally an adult but you still find yourself trying to convince others and validate it to yourself, “I am an adult?” You are trying to decide if you wasted the past 4 + years in college or not? Did you pick the wrong major? Should you look into furthering your education? Should you stay at your company and wait for a promotion or pack up and move to another town? Should you wait to get married before looking into buying a home? Will you get married? Do you want kids? Is the person you with even remotely marriage material? Are you wasting their time? Are they wasting yours? Are you going to swiping left and right your whole life?
(Clearly some of my examples are my own quarter-life crisis questions.) There is just so much going on, while trying to establish a life and figure out who you want to be, it can be easy to let some things, like your finances, suffer. I read an article on Business Insider, by Kathleen Elkins, The 9 Worst Money Mistakes to Make in Your 20s that I just had to share.
Elkins discusses 9 very common mistakes young people make in their finances and it got me thinking about the mistakes I’ve made and seen my friends make.
Elkins explains to readers the importance of not over-spending, which I agree. It’s an amazing feeling when you look at your first “adult’ paycheck. It’s easy to decide to move into a bigger place or go ahead and buy that new car because you have the income now but it’s important to think long term. Just because you have the money doesn’t meant you need to spend it. A good rule of thumb is to ignore raises, instead of raising your cost of living just have the new amount automatically go to your saving account or some sort of investment fund. You won’t miss it because you never let yourself get used to it.
Another problem I’ve seen is people being overly afraid of credit. Over doing it on credit cards will give you bad credit but avoiding them gives you no credit. Without a credit history you may find it more difficult to make large purchases like a house or a car. Educate yourself on credit, don’t avoid. Look into credit cards with a low APR and try to maintain a balance no more than 1/3 of the available credit. (What Your Credit Card Company isn’t telling You)
Elkins also talks about how important it is to get health insurance. I completely agree with how important health insurance is and how taking advantage of it can help with prevention, but I have to re-emphasize how important it is to look into life insurance when you are in your 20s (Yes, You Need Life Insurance). Not only is it more affordable when you are young, you may not be eligible for it later.
It really is a article every 20something should have a look at and see if they are making any of these mistakes.
Read it here.
What kind of future are your money habits buying you? Comment your thoughts below!