10 Guaranteed Ways To Screw Up Your Finances In Your 20s
Follow these steps and you are all but guaranteed to screw up your financial future.
Don’t bother tracking your student loans – There is no reason for you to know exactly how much money you are taking out to pay for that sheepskin, let alone how much your student loan payments will be. After all I am sure as long as you have a degree there will be a line of people waiting to hire you for six figures.
Really – Know how your loan payment is calculated so you will know what your final payment will be. You can use this calculator to play around.
Don’t take out a ton of student loans for a degree that will not pay off. Understand how much you can expect to make in your chosen field. 80K for a degree that will get you a 35K job may make you wish for a time machine.
Don’t bother contributing to your retirement plans. You are young and you will have plenty of time for that.
Really–Employers often contribute to your retirement if you enroll. Find out if you are leaving money on the table.
If you are already doing that take a look at a Roth IRA and see if it is right for you to invest with your after tax money. Even $50 a month can become 70k in 30 years.
There is no reason you shouldn’t buy all the house you can so you can live like your parents now. After all I am sure they started off in that house and lived that lifestyle in their 20s as well.
Really – Your parents had 20 or 30 years to get where they are. If you try to recreate a lifestyle like your parents you had either better win the lottery or live with the consequences.
Eat out all the time. There is only one of you so it is cheaper to eat out than to cook for one.
Really -It is so easy to all run out to eat with your friends every night. I always wonder if people on TV even cook, it seems like they are always eating out. Eating out is much more expensive than cooking at home.
Max out that new Credit card, why would they give it to you if they weren’t sure you could pay it back. Live it up now…drinks are on you!
Many young people get cards in college and don’t understand how they work. They don’t keep track of them and they end up maxing them out.
Consider having a balance of $5,000, at 14% APR, and minimum payment as 2% of your credit card balance. Making minimum payments only, it would take you 22 years and $5,887 in interest payments to pay off this debt.
Don’t make a budget, if there is money in the bank you can spend, that is an easy budget that works.
Really -I have already covered in some detail why you need a budget, but it is like GPS telling you where you are and where you are going with your money. If you don’t have a plan you likely won’t get anywhere.
Quit your job and follow your dreams…NOW!!
Really -You should absolutely follow your dreams, but understand the risks if you simply up and quit and pull the safety net out from under you. It is harder but possible to follow your dream while you work
Of course, many people attribute the lack of a safety net to the success of many people, but for each of them that succeeded I wonder how many there that are regretting that choice.
Every time you get a raise you should increase your spending and your lifestyle..
Really – This is called lifestyle creep and I have written about it before. It is a great way to never get ahead. It isn’t about how much you make, but how much you save and give.
Giving to your church is for those who have big pockets, don’t bother until you have you life in order.
Really – You will never have your life in order, trust me it is chaos all the way. If you don’t discipline yourself to give now it is harder and harder to learn to do it in the future.
You are just as much a part of your local congregation as the rich older members and your commitment can be measured by your giving on many levels.
Emergency funds are for losers, that is what credit cards are for.
Really – Emergencies will only push you further and further into trouble if you don’t have a plan for how to handle them.