You’ve heard so much about the big 20s. It’s the transitioning phase from childhood to adulthood, or better put, it’s the introductory stage to adulthood. You get introduced to the concepts of responsibilities, deadlines, appointments, commitments, and so on. It’s usually the time you choose- to learn, to grow, to live, to love, or not to do any of these things. It’s the phase where you get to define yourself, your values, and your standards. Most people say your 20s are the time for you to learn and make mistakes. And while mistakes are a necessary part of growth, they could also be quite costly. As much as you’d love to learn and grow, it always helps to learn from the experiences of others.
One of the most common mistakes people make in their 20s is money mistakes, and there are so many of those. By spotting these mistakes and identifying them, you’ll easily be able to avoid them. Here are the most common money mistakes people make in their 20s:
In these times of so many distractions and burdens, spending emotionally is something almost everyone falls prey to once in a while. But for those in their 20s, they usually make this a lifestyle. The ideology prevalent in this generation is if you’re feeling sad, moody, or disappointed, and you have a bit of cash to spare, then spend it on yourself and in making yourself happy. If you’re also feeling very happy and excited, then go out with a couple of friends, have fun, and most importantly, spend money! We live in an era where the mantra is “There’ll always be problems, so enjoy yourself.” While this isn’t necessarily wrong or erroneous, it’s just very easy to be abused and it promotes spending emotionally. If you tie your happiness to how much you spend, then you won’t be able to save up or even make plans for the future.
Replacing Growth with Money
Your 20s mark the beginning years of your career. They mark the years where you’ll have many tempting and high paying jobs. There’ll be so many options to choose from, but the best option is always to go for jobs that offer you growth, rather than money. This is so you can make even more money in the future. You need to garner experience, harness, and sharpen your skills. Your 20s are the right time to do this, so focus on increasing your value and your bank accounts will follow.
Spending more than You Earn
There are so many trendy items “in vogue.” But if you choose to be led by these trends, you’ll only find yourself under undue pressure. Your 20s aren’t the time for you to spend extravagantly or to “prove a point.” The only point you have to prove is to yourself. Don’t let peer pressure get to you and make you feel like you have to get the latest designers and best iPhones. Focus on yourself. Focus on your skills. You’ll get there when you get there.
Comfortably Staying in Debt
Due to the undue pressure that comes from wanting to fit in, some adults get so comfortable staying in debt that it becomes a part of their lifestyle. Naturally, some situations might necessitate loans, such as personal or student loans, but irrespective of what your reasons are, it’d be unwise to stay in debt forever. You need to ensure that you always have that debt at the back of your mind and that you make conscious plans to repay.
Not Having an Emergency Fund
This is another mistake people in their 20s make. Emergencies will always come up, and the only way you can truly attain the financial independence you so crave is by having an emergency fund. This way, the emergency won’t really hit you hard when it comes and you’ll be more prepared. Click here to read our post on preparing for financial emergencies.
Having no Financial Plan
You need to refrain from making this mistake of “taking life as it goes.” Financial plans give you something to work with. Your financial goals give you something to work towards, and the more specific your financial plan is, the earlier you’ll get to your goals.
Putting Needs and Wants in One Box
Finally, you need to steer off this error. Your needs are not your wants and your wants are not your needs. One of the most efficient ways to recognize an adult is the ability to prioritize. If someone can ably differentiate needs from wants, and prioritize accordingly, then it goes without saying that such a person has attained a level of maturity.