For many young professionals, your 20s are the years when you finally start making money. But if you are not careful, they are also when you lose money. There are certain mistakes that can cost you literally, especially if you are to come out of those student loans unscathed.
Gen Y Finances: 2017 could be most successful year in your life!
You can avoid making these mistakes by staying on top of your finances. In this post, we have listed some common blunders you may be tempted to make and ways to avert them- prepare yourself for a financial success- post 20s.
- Watch out for the credit card craze
Having your own self-funded credit card can be exciting. Besides the freedom to purchase what they want, many recent grads believe that they can charge all costs to their credit card and pay later. However, what you must know, is thatoffsetting credit card debt is harder than you think.Additionally, the high interest cards and huge balances can reduce your credit score.
Avoid this by keeping one or two good credit cards, and your balances below a third of the available limit- or at best, zero.
- Neglecting a budget
A budget is a financial plan to guide you through your savings and expenditure. If you ignore it, your money will trickle away. Ensure that you have a budget every month for all intended expenses (and income). For most people, preparing a budget is a daunting affair, but it need not be. With the right resources and attitude, you can set up a workable plan for yourself.
There are many innovative apps andonline materials to help you start a budget and prepare for major financial decisions.
- Delaying retirement savings
It is very easy to see retirement as far away when you are in your 20s. Contrary to what many people think, the best time to start saving for retirement is in your 20s when you begin working. This is where budgeting comes in- a specific amount from your income should be put aside every month for retirement. A good savings plan may be the 50/30/20 rule, but there are other effective savings strategies to see you through financial success.
- Not getting a headstart in investment
Investing money is one of the most effective ways to build wealth. You can become rich by investing in the right financial vehicles and making good decisions. Besides having retirement savings, items such as Certificate of Deposits, corporate bonds and stocks provide alternative sources of income which tend to accumulate over time. However, it is advisable to work with a financial expert to avoid costly mistakes.
- Paying your bills late
Recent graduates tend to exhibit a certain laziness to pay bills on time. It’s true that you are busy; work demands are crazy and it gets difficult to keep tabs of all of your financial obligations. But late payment attracts penalties and these income leaks add to significant financial losses later.
You can budget your monthly expenses and due dates to stay on top pf payments. There are apps you can install to remind you or make automatic transfers once the date is due.
Take a more conscious approach towards your finances and you will enjoy your 20s without compromising your financial future. You might find you have a better credit rating that would make it easier to find financial support in later life. Having these checks in place are vital for having peace of mind if something unexpected gets thrown your way in the coming years.