Your 20s are an exciting phase in life. You are just beginning to embrace adulthood but without any blueprint of what’s right or wrong. It is the time in your life with many roadblocks and hurdles to learning from and hopefully not repeat in the future.
This comprehensive article will look into the most common financial mistakes you can make in your 20s and the best way to avoid them. Buckle up. It’s going to be one heck of a ride.
Top Financial mistakes to avoid in your 20s Redpayday
Lack of budgeting and planning
When I was in my 20s, I thought budgeting and writing down every expense you make was so old-fashioned. I am sure many of you also feel the same at this age, but the most important tip I can give you today is figuring out where your money is going. Proper budgeting is fundamental to gain financial stability. Track every spending habit you have, from monthly subscriptions of mobile apps to your pizza bills. Everything has to be recorded.
There are many fancy apps on the market, but I will recommend you using a basic spreadsheet. Google has an excellent monthly expense template for free to get started.
Not getting insurance
You are in your 20s, young, healthy, and have all the energy in the world. It is tempting to question the usefulness of getting insured. After all, you are in prime shape and do not need to visit a doctor. It is okay to question why pay a premium every month for a situation that will most probably never happen in life? I had the same question, and I was convinced insurance is sort of a scam! But trust me, the only thing predictable in life is its unpredictability. Things will happen, and it will happen at the worst possible time.
Get insured, from the accidental protection of your laptop to your health or house. Getting ensured will make sure that all your hard work for the longest of time is not going to waste for an unfortunate event.
Relying on parents
It is not easy to let go, especially when your parents are around to pull you out of any financial needs. So it is essential for you to let go and learn to take responsibility for your own finances. Borrowing money from your parents will impact both their life and yours as well. If you have an urgent cash crunch and need urgent assistance, be responsible. Perhaps a guaranteed payday loan will help you but do not get tempted to take your parent’s help to bail you out every time.
Put an end to your financial dependencies; you have to figure out taking responsibility for your own. There are several ways to get an urgent cash loan; take advantage of them instead. For details on urgent cash loans, visit the RedPayday website.
Credit card trap
All debts are not created equally. Yes, credit cards, on the other hand, is a great tool to have and can actually help you in many ways. But, it does come with some caveats. They promise low-interest rates and many perks, but in reality, they can hog your finances, and spending irrationally can often put you in a situation where you carry off the loan for years to come. The credit cycle is also notorious. Missing one pay will get reported by the lenders, significantly reducing your credit score, which may stop you from getting any loans approved in the future. A credit card is a physiological thing that gives you a false sense of trust, and you end up buying things you may not need to learn to live without credit card debts.
A good idea can be to ditch credit cards altogether for making purchases. But we do understand emergencies can happen; you can consider taking a guaranteed payday loan. These loans are straightforward to get approved for and do not negatively affect your credit score.
Not taking advantage of your free time.
Time does not wait for anyone. The weekend you spent watching back-to-back episodes of your favorite sitcom will not yield you a stable financial future. Your 20s is the best time to take advantage of your time. Perhaps learn a skill or start a side hustle. The secret to financial stability is to create multiple sources of income. Think of ways you can harness your skill sets to create a way of making passive income. Remember, you can never become rich unless you generate a source of income that makes money while you sleep.
Find what you truly enjoy doing and turn that into a side hustle. There are no set rules; use your entrepreneurial spirit to kick in. I created a website where I talked about tech products and made a small youtube channel. They are still growing and helping me financially.
Not saving for emergencies.
It would help if you always were prepared for unexpected life events and save up for emergencies. You will get the added benefit of getting compound interest on your saving as well. Saving also forces you to spend less on unnecessary expenses and helps you grow financially. This is especially true during this pandemic when many people got laid off from work. So always be prepared for unfortunate life events and have an emergency fund.
Start small, create a separate saving account that will make it hard for you to withdraw money from that account. Have enough money that will last you six months without any issues. There will be situations when you will be enticed to spend your savings, but ask yourself if you need to break your bank.
Trial and error are just part of life. It is okay at times to take a misstep but always tries to learn from your mistakes. Try to save as much as you can, and don’t let yourself be carried away with unnecessary expenses. Be independent and take responsibility for all your financial decisions. If you ever encounter situations that require urgent cash, instead of seeking help from friends or family, be responsible and apply for a guaranteed payday loan online. These are all the tips you will need in your 20s to have a promising future ahead.