9 Financial Mistakes To Avoid In Your 20s

The 20s were a great time that changed the lives of almost everyone in significant ways. As people reach the end of their teenage years, they take their first steps into a world full of responsibilities and obligations. In the 20s, people also start planning for the coming decades. At this age, you may have to take care of your finances and your family.

But we also make many money mistakes in our 20s, mainly because we are still learning how to handle our money now. Here are some of the most common money mistakes people in their 20s should try to avoid:

Common Financial Mistakes to Avoid

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1. Not Learning How To Budget

Most people don’t get their first job until their 20s. We often forget how to handle our money when we move to a new place or even start a new life. But you need a budget to keep track of your money.

If you keep accurate records of your expenses and sources of income, your finances can stay balanced. To stick to a budget, you must keep track of your income and spending, set some goals for yourself, and change how you spend your money based on those goals.

Having a budget lets you find costs you can avoid and helps you spend your money in the best way possible.

2.  Spending More Money Than You Make

When you’re in your 20s and life is full of possibilities, you might be tempted to spend more money as your income increases. Especially if you are a student, you could do this.

If that happens, you may have to take out loans to pay your bills. So, it’s always a good idea to keep track of how much money you make and make sure you spend less on things that aren’t necessary.

3. Getting Into Credit Card Debt

A credit card can help you make a lot of money. It makes it seem like you have a lot of money you can spend. This could lead to hefty fees on credit cards for being late.

Then, if you only make the minimum payment or pay late, your credit card balance could get very high. The average interest rate on a credit card is about 36% per year and making the minimum payment only goes a long way toward paying off the interest.

4.  Failing To Set Financial Goals

In the modern world, it’s essential to be clear about the money goals you want to reach and specific about them. If you don’t give your retirement plans enough thought, you could end up with less money than you had hoped for in your golden years.

If you don’t save money, you might not only be less financially stable, but you could also end up with a lot of debt.

Here are the statistics that show how many people hire a financial adviser:

A poll found that just 8% of customers employ a financial adviser. In its first study of the year, the research company looked at patterns among Ireland investors. In the 36-45 age brackets, 76% do not engage an adviser. 47% of 16-25-year-olds and 35% of 26-35-year-olds claim to utilise a financial adviser.

 5. Not Starting To Save Money

Imagine that you are enjoying retirement and that your life has settled into a routine, then suddenly, you have to pay for something you didn’t plan for. But you haven’t done anything to prepare for something like this, and you tend to spend a lot more than you should.

And now you’re stressed out because you don’t know how to solve this unusual money problem. You might wonder what difference it will make if you start saving money in your 20s and if you have money problems when you’re older.

But the truth is that some people never start saving at all. Starting to save and invest in your 20s gives you a head start planning for your financial goals. However, if you don’t have enough funds, you can take loans, such as personal loans or doorstep loans in Ireland to make investments, as the 20s are the best time to start investing.

6.  Not Having An Emergency Fund

You should always have an emergency fund if you suddenly lose money, like losing your job or having to pay for medical bills you didn’t expect. If you lose your job or another source of income out of the blue, having an emergency fund can help you get through the hard times.

The graph indicates the number of financial advisers in Ireland:

Source: Statista

 In an emergency, you can reach out to money lenders in Ireland to give out urgent loans with less paperwork and interest rates.

7.  Not Building A Good Credit Score

A good credit score shows you have paid back all the loans you took out on time. It gives people the feeling that they can be trusted.

To be eligible for loans in the future, you need to have a good credit score. If you don’t do anything to fix it, it could hurt your dreams, like building a house. If you do not fix it, it might hurt your goals.

8. Spending Carelessly

You are doing window shopping and see a beautiful piece of furniture that would look great in your home but would cost about three-quarters of your monthly payments. But you already have furniture in your home that looks much like this but could be better.

Buying this may be a waste of money because you already have a similar furniture that isn’t as good. But if you think you have the money to buy and do it anyway, that’s a different story.

This is an example of careless spending. When you’re in your 20s and just starting to make a decent amount of money, it’s not unusual to fall for it. If things go wrong, you might face financial hardship. So, before you decide to buy something, you should always consider how important it will be.

9. Delaying Savings For Retirement

People often think they can start saving for retirement in their 30s or 40s. But many people need to realise that making money takes time. Therefore, take your time, however minimal they may be.

People who have risked at some time in their lives are the ones that have the most wealth. If you want to be successful, you must be willing to put yourself in risky situations.

The most important thing is to ensure that the risk has been considered and evaluated carefully. The ten years you spend in your 20s will be the best of your whole life.

But while you are at your best physically and mentally and have fewer responsibilities, you should think about your future self and act the right way. If you follow the advice above, you can ensure your future is full of happiness and safety.

Conclusion

There’s no way around that your twenties are an important time for you financially. You just started working, so you might not know much about budgeting and managing your money. Because of this, you must avoid making any significant financial mistakes when you are in your 20s.

In the long run, you’ll be glad you put up with your financial goals. And when you retire, you might stop making any money, and you might have to rely on your retirement savings for a long time. Because of this, you should get a head start on putting money away.