Money mistakes to avoid in your 20's

Your 20’s are filled with milestones and new experiences. Moving out of home (actually does anyone do that anymore?) finishing uni, getting a job, falling in love, music festivals, falling out of love, travel…the list goes on.

avoid600 In your 20’s you may feel ready to take on the world but some common money mistakes can happen and so I thought I would share some tips from those of us that have made it to our 40’s and 50’s and wish we had the benefit of hindsight:

You are going to hate me for starting with this one but I can’t help it as I really believe it is important: – not saving for retirement! You currently have 9.5% of your salary going in but if you create a habit from day 1 of say, putting an extra 5% of your pay in super you won’t even miss it. What’s more, you will be so much more likely to be able to afford a comfortable retirement, as we all know that 9.5% is not going to be enough. If you are female this is IMPORTANT as you may take years off work to raise a family – currently women are retiring in poverty. If you are in your 20’s now you can make this statistic disappear.
Buying a fancy car – new car manufacturers would like to you to believe that your life won’t be complete without the latest and greatest new model. But once you drive out of the dealership your new car will have depreciated rapidly, this means when you go to sell it, you will sell it for a lot less than you paid for it. You may also have taken on some debt to purchase it so you have paid even more for this car over time. Set a budget, save up and get something road worthy and reliable but there is nothing wrong with a second-hand car.
Not having an emergency fund - it’s easy to spend your money but sometimes things go wrong – parking fines, unexpected bills, a bad haircut! Set up an online account even with $1,000 that you do not touch, unless in the event of an emergency (No - a Jimmy Choo sale is not an emergency!)
Using Credit cards – avoid these like the plague. I know everyone tells you that you must have a credit card if you travel but that is not correct, there are plenty of travel cards available nowadays where you can pre-load your savings and spend your own money. Do not rely on credit, it will create bad habits and eventually you have to pay the money back. Learn to budget and save instead. It is a skill and one that you will be grateful for in future.
Failing to set financial goals – this is hard to do in your 20’s as 5 years’ time sounds like a lifetime away but try and have a think about what you would like your life to look like in five years’ time financially – do you want to save for a property, go overseas? If you do not set some goals, you will find you have gone nowhere.
Keeping up with the Kardashians – (it used to be keeping up with the Jones’!). Appearances are not everything, the pressure to fit in and look the part can be financially crippling. See our point above, set some goals on what is important to YOU and keep focussed on those, not what others are doing.
Not paying yourself first – this is an expression many people hear but don’t really understand. It simply means save before you pay bills, buy food, go out for the weekend. How much you put away will depend on several things but as a start aim for 20% and see if you can improve on that each year.

Creating good money habits early in life will help you to become financially independent and successful.

While all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Tanya Carlson, GPS Wealth Ltd nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information”.