In your 20’s, it is easy to be financially irresponsible. Your retirement seems so far away; you are young and feel free and finally control your own life, destiny and money. You may be just in your first serious relationship, or you may be already married. What is important is, you don’t make mistakes now that could really cost you in the future. It is a crucial point to be financially responsible. Here are some mistakes you should avoid in your 20’s, financially:
Don’t take on too much credit. This will only get you into trouble, even if you have a great job now. Use credit only when needed, such as to build credit for a larger purchase. Don’t think of credit as “free money” that you can spend. Instead, think of it as a tool for building a better future. Even if your credit is good, consider taking out a secured loan at first to teach yourself restraint and what it means to pay a credit bill each month. They will often report just like an unsecured loan and build your credit just the same.
Don’t slough off student loans. As soon as you finish school, make arrangements to pay back loans if you need to apply for income-based ones. The key is always to make payments, even small ones that fit your budget.
Never finance a wedding. As much pressure as you feel to have the dream ceremony and reception, resist the urge to finance it. A wedding is no reason to go into debt, and starting in debt is no way to start a life together.
Openly discuss money with any potential spouse. Since fights about money are one of the biggest reasons for divorce, this is crucial. Not only will you enjoy a harmonious marriage together (at least financially), but you will be sure not to marry someone who does not have the same financial goals as you, leaving you unable to fulfill your dreams for the future.
Stop any over-spending. If you never budgeted when you first got out on your own, now is the time to do it, even if you don’t have a spouse or children yet. It is vital to not only your present to the budget but your future as well. It is never too early to start a savings plan.
Stop trying to keep up with your peers with material possessions. There is no reason you need a brand new car because you can get it based on your credit. Cars lose their value very fast. It will not even be worth as much as you paid for it by the time you get done with the loan you take out on it. Instead, buy a modest used vehicle.
These are just some of the mistakes to avoid in your 20’s. You are at a fascinating time financially, and the choices you make now will determine where you are in your future.