Ahhh, your twenties! You’re finally a grown up and you’re ready for freedom, finding yourself, and… finances? Yes, finances! Let’s face it, money is a major part of adulting. The wrong financial decisions can reverberate through the rest of your life. That’s why we’re here to help you avoid these common financial mistakes and build the best possible future for yourself.

Not Setting Goals

It’s hard to plan your finances if you don’t have clear goals. What do you want to achieve in the short-, medium-, and long-term? Whether it’s paying off student loans, building an emergency fund, or saving for a down payment on a house, having specific goals will help you stay motivated and focused on your financial journey.

Ignoring Budgeting

Don’t become one of those people who spends every month-end wondering where your money went. Create a budget. Start by tracking your income and expenses, then set realistic limits for different categories like groceries, entertainment, and savings. There are plenty of apps out there to help make budgeting easier and even a bit fun!

Living Beyond Your Means

The temptation to keep up with the Joneses is real, especially with social media bombarding us with images of perfect lives and lavish vacations. But trying to maintain a lifestyle you can’t afford will only lead to stress and debt down the road. We’re not saying you can’t have nice things. But you should include fun money in your budget, instead of giving in to impulse spending.

Not Negotiating Salary

Negotiating your salary is one of the most important decisions you’ll ever make in your career. Yet, many young people are hesitant to negotiate for fear of rocking the boat or appearing greedy. But here’s the thing: your time and skillset are valuable, and most employers expect you to negotiate. Do your research. Know your worth. And don’t be afraid to advocate for yourself.

 Racking Up Credit Card Debt

Credit cards can be a useful financial tool, but they can also be a slippery slope to debt if you’re not careful. Avoid the temptation to swipe every time you want something. Instead use credit cards in accordance with your budget, paying off the full balance each month to avoid hefty interest charges.

Not Saving Smart

So, you have a savings account. But how much interest are you actually earning? The reality is that most modern savings accounts offer low returns, meaning that you keep the money you have but you don’t earn much more than that. It’s time to look for smarter ways to save. Fixed deposits offer significantly higher interest rates than the banks and the security of your money is guaranteed. Plus, thanks to the power of compound interest, even small investments made early on can snowball into significant returns over the years.

Neglecting Your Credit Score

Your credit score might not seem like a big deal now, but it can have a major impact on your future. A good credit score can make it easier to qualify for loans, credit cards, and mortgages, while a poor score can lead to higher interest rates and limited options. To build your credit score, pay your loans and bills on time and in full.

Not Tracking Subscriptions and Memberships

With so many subscription services and memberships available, it’s easy for those monthly fees to add up without you even realizing it. Whether it’s streaming services, gym memberships, or software subscriptions, those small recurring charges can quickly eat away at your bank balance. Review your expenses regularly and cancel any subscriptions or memberships you don’t really need.

Putting Off Retirement Savings

Retirement might seem like a distant dream in your twenties, but the earlier you start saving, the more your money can grow over time. Besides, you have no idea what the future will hold. It’s possible that you’ll experience a crisis later in life that temporarily prevents you from saving for retirement. If you’ve started saving in your twenties, you won’t worry as much about your golden years.

We hope these tips help you to avoid financial pitfalls and set yourself up for a bright future. But even with our advice, there will be times when you slip up. That’s okay! Pick yourself up, learn from your mistakes, and keep moving forward. Good luck!