Are you in your 20s and not sure where to begin when it comes to money management? Well, here’s a list of 6 rookie mistakes to avoid by the time you hit 30.
Your 20s can be a tricky phase when it comes to money management. Between Education Loan debts, low starting salaries and the pressure to keep up financially with friends, there’s every chance you could make a ton of money mistakes along the way.
While you can afford to make these blunders when you’re still in your 20s, there are a few mistakes that you should avoid making if you want to advance to the big leagues. Remember, when you hit your 30s, you can no longer afford to make rookie mistakes.
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Defaulting on payments
As a 20-something adult, forgetting to make payments on time is inexcusable. Honouring your Credit Card repayments is not only essential for a healthy Credit Score, but reflects positively in your credit report. It signals to the bank that you’re a responsible borrower.
If you’re a frequent defaulter, start fixing your situation NOW! Set up an auto debit with your bank. Align your bank’s auto debit feature with the timing of your pay check so your bills are automatically paid on time even if it slips your mind.
Additional Reading: Ways In Which Your Credit Score Impacts Your Life
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Using a Credit Card to indulge in impulse buying
Getting a Credit Card in your 20s is a smart move. Not only does a Credit Card kick start your credit history, it can come to your rescue during sudden emergencies.
However, many 20-something adults have a tendency to rely far too much on their Credit Cards, so much so that they use it to indulge on impulse purchases while accumulating massive debts. This can devastate your financial standing as a borrower and cause your Credit Score to nosedive.
Additional Reading: 7 Ridiculously Simple Ways To Pay Your Credit Card Bills
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Not budgeting
When you’re in your 20s, with no liabilities and financial obligations to take care of, you can afford to spend a little extravagantly from time to time. But, when you hit your 30s, it’s important that you start getting serious about managing your money.
Budgeting introduces discipline in your financial decisions. With a budget in place, it’s easier to control your finances and keep a track of your expenses. Allocating a definite amount to different spending categories ensures that you don’t overshoot your budget.
Doing this will still leave you with adequate funds to take care of some for your other financial goals like saving up to buy a house, paying off your debts etc.
Additional Reading: A Superbly Easy Way To Keep A Budget
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Ignoring Health Insurance needs
You may be in the pink of health now, but medical emergencies don’t give a warning before they come knocking on your door. As you grow older, your health is likely to deteriorate and it only takes one trip to the emergency room to wipe out all your savings.
Buying a Health Insurance plan that offers good coverage will help you stay prepared to dodge life’s curveballs.
Additional Reading: Must-Know Health Insurance Rules
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Taking investment advice from near and dear ones
Your cousin or brother-in-law might be ready in an instant to dole out investment advice and offer great stock tips, but that doesn’t mean you need to pay heed to every single bit of investment advice that comes your way.
It’s hard even for seasoned investors to beat the stock market, so unless your relative or friend has a long, proven track record of successful investments, you should resist taking risks based on their advice.
It’s imperative that you ensure that anyone you turn to for financial advice has impeccable credentials and your best interests at heart. Additionally, look out for fees and charges that your investments might involve since high fees can cost you hundreds or thousands of rupees over your investment tenure.
Additional Reading: Why Aligning Mutual Fund Investment As Per Financial Goal Is Important
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Letting emotions dictate your investments
When you first get started with investing, falling prey to your emotions and allowing them to guide your investment decisions is easily one of the most foolish things to do. Investing in stocks of companies that are overvalued or selling a company’s stocks at a low price when the market is looking glum, is allowing your emotions to dictate your investment decisions.
Instead of acting on your emotions, create a sound investment strategy based on your financial goals. When investing in a company, judge it by its credentials and fundamentals. If you’re investing for the long term, you shouldn’t buy or sell any investment unless your actions are driven by a careful analysis of how your decision fits into your overall financial goals.
Instead of making rash decisions that you might regret later, think them through carefully before making any decisions.
Additional Reading: How To Get Your Investment Strategy Spot On!
These pointers might appear difficult to follow in your 20s, but once they become second nature to you, you will be well on your way towards securing your financial future.
You can start by taking a look at Credit Cards that offer great cashbacks as well as paperless approval.