Main menu

Pages

Financial mistakes to avoid making at the age of twenty

 Do not make these financial mistakes in your twenties for a stable financial future.

When you are in your twenties, making financial decisions that you regret may be the last thing on your mind, but the personal finance choices you make in this period, and before you reach the age of thirty, may affect your future life for decades.

To avoid this fate, it is recommended to avoid 7 common mistakes at this stage of life, identified by an article published on the website of the American "Invested Wallet" (Invested Wallet), known for investment education.


1-living on loans

It's easy to get as many loans as possible, but applying for more money than you need, so you can, for example, buy a car or live in a big house, is a bad idea at the age of twenty.

Depending on the amount you borrow, you can spend up to 10-25 years repaying these loans.

So at this age, it is better for you to completely move away from spending loan money in order to have a better lifestyle, and instead Deposit this money into your savings account.

2. ignore your credit score

Delayed credit card payments, for more than 90 days, can lead to a drop in your credit score, a score that creditors review before extending credit.

3-choosing bad friends

Your best friend may be a lot of fun for a day, but is he able to help you achieve your financial goals

And, for example, if you choose a dodgy roommate who is evading payment of his dues, you will pay the price later through your credit score.

4-neglect on emergency savings

When you raise money, in an emergency savings account, you have funds to cover car repairs, medical bills, veterinary costs, home repairs, and other unforeseen expenses that you may have to charge for credit cards.

And in order to avoid paying interest on accumulated debts in an emergency, save at least a thousand dollars, and preferably an amount more so that credit card debt does not stretch into the next decade of your life.

5-finance your life with credit cards

Sure, going out for a drink and dinner every night with friends, buying stylish furniture, spending frequent vacations, and getting the latest electronic devices may be fun. Still, if you put all these things on credit cards, you will inevitably pay for them later.

When you live beyond your means by financing everything you want with credit cards, you can end up falling into the trap of debt and high-interest rates that will follow you beyond your twenties.

6-ignoring the opportunities of the pension fund

Starting saving for retirement in your twenties is brilliant because you have decades to build your own retirement account.

For example, if you contribute $ 5,500 a year to a retirement account and earn 7% per annum, you will have about 31 thousand after 5 years, and if you save the same amount for 15 years you will get $138 thousand. Keep working for 35 years and you will receive about 760 thousand dollars.

7-complacency in achieving goals

Setting financial goals in your twenties motivates you to turn dreams into reality. Then it's time to start saving for a down payment on a house, contribute to a retirement account and build up emergency savings, and build up your professional skills in order to earn a higher income.


Comments