The age between childhood and adulthood is filled with plenty of mistakes that we learn from but committing these money mistakes can affect for the rest of your life.
Personal finance as a subject is unfortunately not given the importance that it should get in schools and colleges. With zero or insufficient knowledge of personal finance, we are thrown into the real world in our early 20's. Early 20's are the most important phase of our life - we form habits that can make or break us. Bad habits can take an incredibly long period of time to get rid of.
Our 20's are also a phase where we are quite inexperienced in different aspects of life. This inexperience leads to many mistakes that we make and learn from. But making mistakes with your money is something that you cannot afford to do. Piling on debts and not saving enough can put you in a financial disaster that may take years to recover from. Here are some common money mistakes in your 20's -
Not tracking your money - The most important money management step is knowing where exactly your money has gone. Unfortunately, many fail to track their expenses citing a number of excuses. Tracking expenses increases awareness of your spending habits and allows you to make better choices with your money.
Not taking risks - Your 20’s are a time when you should be grabbing opportunities and taking calculated risks. Learn how to invest, diversify your portfolio, and take advantage of compound interest.
Not acting your wage - A very common mistake as we tend to live for today and show off for the gram. It is so important to live within your means and avoid living a lifestyle trying to impress others with the money that you don’t have.
Going into debt for a wedding - One of the greatest days of our lives is our wedding and we tend to make it as glamorous as we can. Avoid blowing up all your savings or racking up debts that you may take years to pay off, for that one big day.
Borrowing money for a car - When you’re in your twenties, you don’t need a fancy ride. You need a reliable vehicle with great gas mileage. Avoid buying an expensive car even on an installment basis.
Failing to save for emergencies - Even if you haven't experienced any financial emergency yet, getting hit with one can cripple your finances easily. Learn how to save for an emergency fund, here.
Living without a budget - If you don’t develop this habit in your 20’s, you will have a hard time doing it later and you will continue overspending. Learn about budgets and how to create one for yourself, here.
Poor college choices - Make a financial assessment of your educational path so that you are not riddled with student loan debts. A college degree is great but at what cost is something you should ask yourself. It is not worth spending years of your life trying to pay off those student loans.
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