Consolidation Plus Gives 7 Financial Mistakes to Avoid in Your 20s
Here is a sponsored blog post for our former selves (LOL) and for twenty somethings or even thirty somethings. I’m afraid it may be a bit too late for us forty somethings! But I enjoyed checking it to see what I had done, if anything. One thing that is also good to keep in mind and which is in point three is building credit within the country or countries you want to live. A friend said that when they moved to the USA from the UK, they had to pay cash for things because they had no credit and in hindsight should have started working on that years before they moved.
7 Financial Mistakes to Avoid in Your 20s
Your 20s will be one of the most exciting times in your life. But, it’s important to make good financial decisions. How you handle your finances in your 20s will set the tone for the rest of your life. Consolidation Plus has the seven major mistakes that will your finances for years to come. Avoid making these mistakes to ensure a healthy future.
Not saving money.
It may never be easier to save money than when you’re in your 20s, especially if you are single without a spouse or dependents. Regardless of your financial obligations, savings should be a priority. A healthy savings is a safety net you can access in case of an emergency or other unexpected expense, says Consolidation Plus. Saving up for major expenses is also better than putting them on a credit card and paying interest.
Spending without a plan.
Your 20s should be spent learning to be intentional about your money. If you don’t have a plan for spending your money, there’s a risk of spending too much money frivolously rather than planning your splurges. Putting together a plan, or budget, helps you spend your money in all the right places and leave some for fun and entertainment, as long as you can afford it.
Not building your credit.
Credit will play a major part in your financial life. It’s very easy to wreck your credit score, but difficult to rebuild your credit once it’s damaged. Start paying attention to your credit score early in your 20s. You can build and maintain a good credit score by opening and using credit accounts, paying all your bills on time, and minimizing the amount you carry.
Taking on too much debt.
Many college graduates enter the real world with tens of thousands of dollars in student loan debt. Don’t make it worse by adding on more debt, credit card debt in particular, recommends Consolidation Plus. If you can delay buying a house or car until you’ve reduced your student loan debt, your finance will be in much better shape.
Not taking advantage of your employer’s retirement plan.
Many employers match some percentage of your retirement contributions, as long as they’re made to the employer’s plan. This matching allows you to grow your retirement savings beyond what you could do on your own. If you start in your 20s, your money has more time to grow, allowing you to have a larger retirement savings.
Not investing in your career.
Some aspects of career growth depend on your experience, but there are still things you can do in your 20s to advance your career. For example, you can get additional certifications, training, or even a graduate degree to ensure long-term success in your career, Consolidation Plus recommends.
Not setting financial goals.
Without strong financial goals that you’re working toward, you’ll look back and regret that you didn’t set some goals for your money. For example, you should have goals for savings money, investing in your retirement, and paying off student loans. Consolidation Plus recommends setting goals and putting together a plan to reach them. Doing these two things could set you up to live the financial life you want.
Enjoy the freedom of your 20s, but be sure to balance with some financial responsibility. You won’t regret taking steps to secure your financial future.
Going through these and thinking back over my own mistakes (a fun little game), there are definitely savings I could have made which would see me in a better financial place than I am now. However, regarding the point about not investing in your career, I am proud to say that I did invest in my career and cared deeply about that which has meant I’ve been able to set up and run my own company and have an awesome career that I love. So to you 20 somethings, I’m sure you will take notice – the ones I know seem to be much more informed and interested in finances than when we were that age! (I suppose we’d better forward this on to all the kids we know who are in their 20s too. Please feel free to share!)
Meghan Peterson Fenn is the author of Bringing Up Brits, co-author of Inspiring Global Entrepreneurs, co-founder and Director of Design and Web at Shake It Up Creative. And, she is an award winning expat blogger and mother of three.