Your parents got you to your 20’s, and you’re partying like it 1999. You have newfound freedom, you make all your own decisions, and you’ve got your whole life ahead of you.
Financially free, you now have all the power to make some big choices that can dramatically impact your financial future. But, with that power over your choices it’s a smart move to make some good choices to avoid some big pitfalls.
Don’t sabotage yourself by making these big mistakes.
1. No map and no plan, I’ll just wing it syndrome
Pitfall: Many 20-somethings are clueless about their finances because they don’t have a way to navigate their spending. Life without a budget at any age is a bad practice. No budget means there’s no accountability, you spend as you wish and don’t even know where your money goes.
Avoid it: Make financial plans. Budgeting will become second nature in your 20’s and if you keep up that good habit, you’ve set yourself up for a healthy financial future and will avoid the throws of bad debt.
2. Minimal thinking syndrome
Pitfall: Paying only the minimum balance every month makes you a slave to your debt for many, many years, long after you enjoyed whatever it is you bought. You don’t want to give up your new found freedom only to be owned by creditors.
Avoid it: Pay more than the minimum. Best practice is to not use your credit card for wants, and to pay off the balance every month so as not to incur interest. But if you’re already down the track then start paying down your card now. Check your credit card statements, and use a debt calculator to show you how long you’ll be paying for your current balance if you only pay the minimum. And remember that amount is only if you don’t keep adding to it with new purchases. You’re only giving the bank money for nothing.
3. There’s no emergency I can’t handle syndrome
Pitfall: In your 20’s and feeling fancy free? You’re probably just starting to learn a few life lessons that stuff happens. Emergencies crop up and there is nothing you can do about life. Without an emergency fund, you’ll have to use your credit card or get personal loans just for having a car break down you didn’t expect.
Avoid it: Why pay interest, when you can receive it. Start saving even $20 a week into a high interest saver and let the bank add to your money. When emergencies happen you’ll feel good because you’ve got it covered.
4. Relying on one paycheque syndrome
Pitfall: Long gone are the days of job security and along with it a complacent attitude when it comes to financial security. These day positions are fickle and with ever changing management and limited stability in business ventures you could find yourself suddenly redundant or replaced. It’s smart to have multiple income streams, either an entrepreneurial side gig or moonlighting in a part-time job.
Avoid it: Building up debt to live a lifestyle you want to live but with only one income to pay it off is a bad financial choice. Line your ducks up with a good financial life plan and get yourself an extra income to supplement your lifestyle or pay off your debts. Get ahead of your finances by taking on extra work as you pursue greater career opportunities. Take job opportunities as they arise, even with another company. Loyalty is a lost word these days. Companies will replace you if they think the job can be done cheeper by someone else. Manage your career as you would your financial future and you wont be caught out when your boss give you the “we wish we could keep you on speech.”
If you’re facing financial hardship we are here to talk about a solution. Call us on 1300 887 211 or Book a Free No Obligation Phone Consultation with our friendly team and we can discuss debt management options specially focused on your personal situation.