Your 20s may not be the best, most stable time in your life, but it certainly is the best time for experience. Growing up with little to no financial literacy allows you to make some really…interesting decisions. But, it’s okay, this is how we learn! So let me take you on the journey of financial mistakes you should try to avoid in your 20s.
- Lack of financial literacy
What exactly is financial literacy? Well, it is “the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.”
It’s basically your relationship with money. If you’re spending beyond your means; that’s a toxic relationship. But if you have a spending/investing system; that means green flags all around. Sure, they don’t teach us about it in schools, but luckily, we have the world wide web! With blogs (hello!), courses, and social media, it’s never too late to teach yourself.
2. Not having an emergency fund
We’ve talked about planning an emergency fund before and honestly, the sooner you get it, the less anxious you will feel. It’s your safety net, your lifeline, your home when you have no home. Literally, you can’t go wrong with this one.
3. Having no financial goals
Having something to look forward to will motivate you to better handle your finance. Setting goals will not only put you on the road to financial security, but it will also get you one step further to your dreams. They can be short-term goals like saving up for a car, or long-term goals, like saving up for retirement.
4. Having no retirement plan
Speaking of retirement, you’d really want to start a retirement fund early on. You cannot depend on the state-provided retirement income alone, it just doesn’t seem plausible. And yes, being 65 years old seems so far away, but time flies and I don’t think you’d want to get up and work at that age! So, use your youth wisely.
5. One lonely stream of income
So, you’ve decided to invest some of your money, and allocate some towards an emergency fund, savings account, and retirement fund. You still want to be able to enjoy life and have enough money to do so. Having several sources of income can help not only financially, but it will also hone your other skills. You can do so by having a source of passive income or freelance jobs.
6. Unhealthy habits
It’s not about how much you make alone that could ruin your personal finance. Not taking care of yourself will cost you greatly in the short and long term. Investing in your health by adapting to a better healthy lifestyle will save you thousands in medical bills, which are an inevitable burden for everyone. And so remember to put your well-being first.