7 Biggest Deadly Money Mistakes To Avoid In Your 20s

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  1. 1) Credit card debt
  2. Use your credit Cards Intelligently.
  3. 2) Misunderstanding wants and needs.
  4. Wants vs needs — understanding ourselves better
  5. 3) Taking advice from the wrong people
  6. 4) Neglecting on financial literacy
  7. 5) Not investing
  8. 6 Things To Consider Before Investing.
  9. 6) Student loans
  10. The 9 Most Useless College Degrees in America
  11. 7) Equating money with happiness
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It is often said that your early twenties is the best time to make mistakes because you have plenty of time to recover. Although this is undeniably true, money mistakes can ruin the rest of your life.

Here are the worst 7 money mistakes you should avoid in your early twenties.

1) Credit card debt

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Congratulations on your job at the bank! Yes. You work for the bank. After taxes, your largest expense is your mortgage and credit-card debt._Robert Kiyosaki

The wisest decision you can make in your twenties is to avoid credit card debt as a rattlesnake. Not only does it enslaves you to interest payments that last half of a lifetime to get rid of, but it also has devasting consequences that can ruin the rest of your life. Unfortunately, many people learn this lesson the hard way and by the time they realise it, the ship is gone. Read my other article about how to use credit cards.

2) Misunderstanding wants and needs.

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Distinguish between real needs and artificial wants and control the latter. _Mahatma Gandhi

In the world we are living which goods and services are flooding into the economy, spending tends to be the trend. We work long hours just to buy the latest iPhone or Gucci clothes. Don’t get me wrong here, it is your money and what you spend it on is totally up to you. But before you spend a dime on something, ask yourself this; Do I need it? You will be surprised to see how few our needs are. For instance, you need a phone to stay in touch with people but does it have to be the latest iPhone? We spend a lot of money on things we think we need but in reality, they are wants. We all have wants and you should too. But know that they are limitless. @Prateek Vasisht did a great job on wants vs needs. Read it here

We cannot have all we want but we can have what we need.

3) Taking advice from the wrong people

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Learn to take advice from those who were competent through their own experience to give it.

Advice is something that we get free from parents to friends, teachers to colleagues, all advising us on what to do in life. After all, where can be a better source of advice than from those who love us? But would you go to a doctor to seek advice about cars? As much as our loved ones want to help, know that they are only experts in their own field with limited knowledge. So when you are about to make a money decision, consult with those who have done it and succeeded. This applies to everything in life.

4) Neglecting on financial literacy

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The number one problem in today’s generation and economy is the lack of financial literacy _Allan Greenspan

The ability to understand and manage your personal finance not only helps you achieve your financial goals but can be used as a blueprint to avoid poor financial decisions that most people make. You cannot be good at something if you don’t understand it. Finance is not an exception. Unfortunately, financial literacy is something that has yet to be taught in our schools and universities. Instead of learning money concepts, we spend years memorising Latin words and poets that have little to no benefit in our life.

5) Not investing

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If you don’t find a way to make money while you sleep, you will work until you die _Warren Buffett

This links us to the previous mistake. Start saving and investing is the best choice you can make in your twenties. The reason you start investing as early as possible is that when it comes to investing, time is your friend. And even if things don't work out as planned, you have plenty of room to correct them. You can learn more about what you should consider before investing in my previous article here

6) Student loans

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Bankruptcy laws allow companies to smoothly reorganize, but not college graduates burdened by student loans. _Robert Reich

Before I go any further on this one, let me make it clear, I am not saying you should not take a student loan indeed you should but only if you are going for a major that is worth it. Allow me to explain, Although the loan doesn’t have to be repaid until you earn a certain amount, it is still a debt that accrues interest over time. Here in the UK, for instance, the median salary is around £31k and the repayments start when you make around £20k at a rate of 9% above the threshold. So say your salary is £30k, you will pay £900 (10000*0.09). So if you are going to university to make £30k a year, seriously you need to think twice before taking a student loan. We are no anymore in a world where you have to go to university to just get a degree. In fact, for most majors, going to university is a waste of money. More about it from Isaiah McCall

Fun fact: President Obama and Michelle finished paying off their student loan in 2007.

7) Equating money with happiness

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It is good to have money and thing money can buy, but it is good too, to check up once in a while and make sure you haven’t lost the things that money can’t buy. _ Robert Reich

It is nice to make money and build a greater future for yourself and your family but at what cost though? We should never forget the two most important things we have in life which are time and family. And in our twenties, we might get into the thinking of making money first and then enjoy life later but realise this; no matter how much you make, it cannot give you back the good times you experienced with close ones. You should know when to just switch the gears and focus on what matters most.

I am not in any shape form a financial adviser and none of this is financial advice. It is only for educational purposes.

Thanks for Reading!