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10 Common Money Mistakes People Wish They Realized In Their 20s

10 Common Money Mistakes People Wish They Realized In Their 20s

Do you want to be financially secure? Many young adults in their 20s make money mistakes through lack of knowledge, which can result in debt and financial insecurity.

It is important to get on top of your finances now – check out 10 common money mistakes people wish they realized in their 20s.

1. Spending to make themselves feel happy

Many young adults who spend too much money do so because it temporarily helps them to feel good, but mixing money and feelings can be dangerous.

Avoid going shopping if you’re having a bad day – the temporary fix from emotional spending will pass quickly, but actually saving will leave you happier and more fulfilled in the long-term.

2. Not having emergency savings

When you’re in your twenties, having enough money in your bank to pay rent and buy food and a few drinks can feel like more than enough.

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However, planning for an emergency could really help you later down the line – and if there isn’t an emergency later on, you will have savings for a car, or a little to help with the deposit on a house. Try to have 6 months of living expenses saved up as a safety net for the future.

3. Choosing not to make investments

Investing may seem boring and confusing, but it can really benefit your finances. If you do decide to make investments, ask professionals for information and advice.

A bad investment is a waste of money, but once you have some tips and knowledge behind you, you could make an investment that changes your life financially.

4. Being frugal and failing

Often young adults in bad financial situations commit themselves 100% to getting out of debt and saving up, leaving no money for anything extra. This can get very dull very quickly, and can actually result in binges of high spending.

This is no way to live; instead, factor in a small amount of weekly money for fun. Make sure it is a small amount, but you can spend it on whatever you want. This is more likely to help you to save and pay off debt, as you are far less likely to binge spend your money.

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5. Moving out too soon

After a whole life of living at home, many young adults can’t wait to move out and get their own place. While this is fine for many people, it is worth considering staying at home for a little longer as it is a great opportunity to save lots of money.

Ask yourself; do I need to leave immediately, or could I leave in 3 months? How much money do I want to save up before I move out?

6. Not setting long term financial goals

Most people in their twenties have short term financial goals, like paying their rent and bills. However, if you can afford to set short term financial goals, it is likely you can afford to set long term ones too. Decide how much you want to save in a year, and start working towards that.

One day, you may want to start a business or buy a house – setting long term financial goals will make these things possible.

7. Ignoring their employment benefits

If you work in a company, you are probably making small monthly payments towards retirement and healthcare. Many younger people see this as a necessary evil, but it is much more beneficial to you than the company you work for.

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Take some time to look at the terms and agreements surrounding these monthly payments, and see if you could alter your payments to take advantage of any extra financial benefits.

8. Staying in credit card debt

Credit card debt is one of the biggest financial issues for young adults, with interest rates averaging around 16%. If you choose to make the minimum monthly payment, you may be paying off your cards well into your thirties, when you will have other expenses that need paying.

It is difficult to save with debt, and even more so if there is interest too, so try to focus on paying off your credit card debt as soon as possible.

9. Choosing money over growth

Many young people take job offers with a good wage, turning down positions with a lower income but much more opportunity for growth.

It is important to choose growth over money; these learning opportunities and chances for promotion are invaluable, and it is likely you will end up with a much better wage than the first job after a short amount of time.

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10. Spending too much on unnecessary extras

The new iPhone or expensive hair extensions; can you really afford these costs on your current budget? It is important to treat yourself to things you love, but it is also important to sit down and work out if your outgoing expenses are too high.

Before you buy a high-end, luxury product, ask yourself these questions; can I really afford this? Do I need this? Why do I want it?

Featured photo credit: xvire1969 via flickr.com

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Amy Johnson

Amy is a writer who blogs about relationships and lifestyle advice.

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Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

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Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

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It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

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6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

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Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

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Featured photo credit: Pexels via pexels.com

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