For many of us in our twenties, we experience the elation of suddenly earning substantially more than we’re otherwise used to; long gone are the days of babysitting and summer jobs.
Of course we’re excited to treat ourselves for all of our hard work, but the decisions we make in our youth can haunt us for years to come.
Therefore, you should try your best to avoid the pitfalls that are all too common in your twenties!
Unlike previous generations, this wave of employees are not expected to spend 30 years at one company, building up a safe haven pension plan for their retirement.
Today’s workplace is fluid, which is just one of the reason why contributing to your employer’s retirement plan makes sense.
Even if you intend to change jobs every few years, it’s just common sense to contribute at least up to the employer match as long as you’re with every company. Furthermore, consult various saving options that will give you interest over time – by investing now, the onset of the years will allow your stockpile to grow into a sizable retirement.
Student loans – there is no doubt that they suck, especially with so many college graduates struggling to find a job.
That being said, skipping on payments will only allow this problem to fester, so avoid this common mistake, as interest will increase and your credit score will plummet.
Consolidate your loans and arrange to have the fees automatically taken from your account on a monthly basis.
Another debt that many people in their 20’s fail to adequately address is that which is racked up by their credit cards.
While you will absolutely want to have one to establish a credit score, use it minimally and keep track of your spending so you don’t fall for the temptation of spending more than you can pay off.
Don’t spend emotionally – this is something that we’ve all been guilty of in our lives, and doesn’t lead to dire disaster when done on a small scale.
However, splurging on the latest designer threads because you feel ugly or treating yourself to a trip to the Bahamas because you were dumped can lead to credit card debt that will be difficult to overcome years down the line.
You may not be surprised to learn that at least one-third of couples overspend on their weddings, which can be attributed to peer pressure, failure to budget and, of course, emotional spending!
To sidestep this, provide yourself with thorough research and insight into your combined finances before deciding upon a number.
To avoid impulsive buying, create a “shopping list” and give yourself the appropriate time to mull over the price tag and hunt around for potential savings.
Another common source of emotional spending is buying a house.
Yes, this is the “American Dream” that we have been instilled with ever since we were a child, but hastily leaping forward with this next step into adulthood leaves many people in their twenties financially burdened and bummed.
It’s all too easy to fall in love with one particular property that seems to complete your dreams, but do NOT take the leap if you cannot realistically handle the mortgage.
Counting on that pending raise or waving away concerns with “we’ll figure it out” is what gets many people in hot water down the line.
Furthermore, always budget for the maintenance that comes along with owning a home; there will be no landlord to call if a pipe bursts or your sidewalks need shoveled, so practically assess whether you can swing the yearly costs that come with upkeep on top of the mortgage.
No matter what your financials worries are, it’s easy to avoid stress if you prepare correctly for the major financial milestones.
Getting in touch with a financial investor is a great first step to getting your fiscal life in order.
If it’s an individual burden such as student loans or a cooperative investment including buying a house or getting married, always be open to communicating with your loan officers, advisor or each other.