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Most common money mistakes in your 20s

November 25, 2015

finance

In your 20s you make huge life transitions, from student to professional, from adolescent to adult. Approach your finances as an adult as early as possible to avoid struggles with money later, and consider these three common money mistakes we make in our 20s.

credit card stack

Image by: andres rueda via Flickr

Credit card debt
Credit card debt is the most common money mistake made by people of all ages. While credit cards, if used properly, can be a useful tool for those big purchases or used in an emergency, they can also create a false sense of financial security.

Interest rates on credit cards can be high, especially if your credit rating is low. Any month that you don’t pay-off your credit card completely, you have to spend more money on the accumulating interest.

While paying only the very low minimum monthly payment is completely affordable, it’s another practice to avoid with your credit card. If you only pay the monthly minimum on large credit card bills, the interest rate per month will exceed the amount you paid to ward off debt chasers.

Pay more than the monthly minimum or the total bill when you can, and if you can’t, STOP using your card until you have.

No emergency plan
It’s important to have an emergency money plan (that doesn’t solely include your credit card) in case something unexpected happens. While you might not be able to count on one hand the unforeseen circumstances you could possibly end up in, life can surprise you and having a savings account with a nest egg will make a huge difference.

If you go through your 20s and no unexpected financial costs occur, well not only are you very lucky but you’ll have a nicely padded savings account to dip into when you enter your 30s.

Ignoring retirement
While it seems like ages away, retirement is something to be considered even if you’re in your 20s. If you plan ahead and save up a little each month or start a retirement fund, your 65-year-old self will be very thankful. If your income is low and you are stuck paying off previous debts, even just a few pounds a month will eventually start to add up and instil a good habit for when you have a little extra cash flow.

While money does seem to control our lives, it’s smart to maintain control over your finances. Talk to your bank or a financial professional to get the most thorough advice. They can help create a plan within your budget and help you to adjust the plan as your financial situation changes.

Do you have any tips for staying on top of your money in your 20s? Let us know in the comments below.

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