Being in your 20s is often an exciting time filled with series of life changing events. During this time you will make important financial decisions that can have a great impact in your future. During this period many fall into financial trap that can have consequences for years to come. With so much going on it’s easy to get lost and make not so smart financial decisions. Here are 10 mistakes in no particular order that many people make in their 20s.
10 Money mistakes people make in their late 20s
10. Borrowing money for a wedding
I have seen people planning extravagent weddings without exactly how to fund them and end up borrowing thousands to finance that one day party. Some other people are lucky and blessed to have extravagent weddings without breaking their bank accounts. Some other people just want to be and do like everyone on the gram or like their friends and are ready to contract debts to finance their wedding which ultimately forced them to start their new lives with debts to pay off already for a one day party. Have a wedding you can afford, if you want more than what you can afford, save, wait until you are able to blow that budget without regretting or bothering people to help you pay off your debts. Remember don’t spend like them if you don’t earn like them.
9. Depending too much on your parents
If you don’t plan it wisely and smartly, depending too much on your parents can be a blessing and a curse to have parents who finance everything for you. It can be a blessing if you use it to start planning your financial future. Think about it, they have paid your tuition, apartment, medical aid, clothes, food and giving you pocket money. You owe no one nothing and you have extra money all that with zero work experience on your CV. Your are among the very few. However this can be a curse as you might get too used to that and start feeling entitled to their money and spend it on futile and always asking for more to maintain a lifestyle you can’t afford without them. If until now your parents finance your life, use this opportunity to reach your financial independence quickly.
8. Falling to plan what to do with your money
During this stage of their lives, people don’t plan properly and intentionally on what they are going to do with their money. They fail to balance the needs and wants of today with needs and wants for tomorrow. People usually fail into the trap of giving up on their career of choice too soon and go for jobs that don’t make them happy but pay the bills. Forgetting that launching a career takes years of hard work and dedication. Planning properly with what you are going to do with your money is important.
7. Avoiding money conversation with partner
When you decide to merge your life with your partner and get married, one of the most important conversations you must have are about finances. Having an honest as open discussion about budgeting, debts, spending behaviors and patterns will save you on the long run. Being on the same page about how you see, treat and use money will help keep money problems from affecting your relationship as you know where you’re getting yourself into. Discussing about money will help you understand where each of you need help, who will be best at budgeting, who should be in charge of investing etc. It might sound silly but extremely important conversation to have.
6. Living beyond your means/ copying what you used to have at home
Lot of people in their late 20s want to keep up with the Jonneses, trying hard to live like their friends not even knowing or realizing that their friends earn more than them that’s why they can afford the lifestyle they live. In some other cases the friends you are trying to keep up with are drowning into debts as well because they are also trying to keep up with other friends. Remember do not spend like them if you don’t earn like them. Another mistake to avoid making is expecting to live at the same level as your parents are at this stage on life, forgetting that your parents spent decade accumulating their wealth. You can do that too, you just have to accept to start somewhere even if yoi won’t have the standard of living you were used to at home.
Which other common money mistakes people make?
Till next Sunday