The most common financial mistakes to avoid in your 20’s

The majority of youths get employed in their 20’s. This is a very critical age because you are may be immediately from college and you want to live your dream life. In the process, you realize that your job cannot cater to all your financial woes. Due to frustration, you end up making severe financial mistakes. Below are some of the financial mistakes to avoid in your 20’s.

1.Not having self control

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A number of newly employed young people live a lie. You find your friends with good looking clothes, shoes, electronics and without thinking you just buy them. They spend all their money on irrelevant things. Many people in their 20’s are naive and they waste money trying to please their peers. You must question the purpose of every item you purchase, and if you seriously need it. Even before it’s end month your salary is all gone because you just become a spendthrift. Lack of self-control may lead you to huge debts.

2.Failing to plan

When one is newly employed, he or she focuses on spending money. You have to sit down and know your total earnings. Know the debts to pay off, maybe if you have student loans or car loans. Calculate the total amount you use on your bills, house rent, electricity, water bills, and household shopping. You have to know how much you should save and how much should be left for petty cash to use on daily household finances. Emergency funds should cater to unforeseen problems like losing your job or medical bills, they should last you for over six months. You should discipline yourself not to withdraw money meant for other purposes. Having your money on a budget and maintaining it will enable you not to use your money unnecessarily

3.Surviving on debts

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The first thing you should focus on is being off your debts immediately after employment. Let us say college fee debts, car loans, and any other form of loans. Unfortunately, currently, people are competing with themselves. You want everything to be extravagant. You take a loan for a huge wedding, an SUV, and even buy a huge mansion. Doing all these big things under huge debts might make you survive on loans in your entire life. Every loan has an interest rate, meaning that paying those loans will greatly affect your finances. Buying items or going on trips on credit card debt may be a burden in the future. Just be realistic, every journey starts with a single step, so be patient and live within your means. The show-off spirit that is currently in the world, should be avoided by all means.

4.Not saving for retirement

Many people, in their 20’s feel that they are too young. Retirement feels to be something for the old people, but this is not true. The earlier you start preparing for your future plans the better. You should at least save 10% or 15 % of your salary every month. This way you are assured of not depending on your kids in the future, and you can be able to live a better life after retirement. Retirement funds accumulate over time and you can have an investment that will always bring more income in your home.

5.Not looking for a side hustle

In your 20’s you always feel very comfortable after getting a job with your dream company or doing what you love. Living an average life is among the financial mistakes that young employees make. If you have time, or if you can create time, try to look for another job or create another job. You are still very young to get into your comfort zone. If you have the talent to utilize it to make more money, there are many platforms currently to earn you cash. Try investing, in various areas that you have considered useful and confirmed that they can earn you cash. Investing is not an easy way to earn cash, but the little you earn can turn out to be fortunes in the future.

6. Not having a health insurance.

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Currently, most of the jobs cater to their employee’s health insurance. If you are self-employed, do not hesitate to have good health insurance. It will save you in times of need. If let say you have dependents, you never know when you or your loved ones will fall sick. Health is very important. Unfortunately, most youths assume that they are very energetic and nothing can happen to them. Protecting your lives with health insurance is very beneficial, it helps you out in the least unexpected ways.

By following the above financial mistakes in your 20’s and correcting where you go wrong, you can actually become a more financially independent person in the future. Be more realistic in all the financial decisions you make.