Budgeting | Personal Finance | Article
Financial Mistakes People Make In Their 20s (And How To Avoid Them)
by The Simple Sum | 9 Mar 2021 | 3 mins read
Your 20s are an exciting time.
Early adulthood comes with your first job, your first real paycheck, your first car and maybe even your first home.
Your first real job definitely makes you feel like you’re rich but what many people don’t realise is that decisions made in your 20s can make or break your financial future.
Here’s a list of 5 things that you can avoid to make sure you don’t fall into crippling debt or a financial rut later in life.
1. Not Saving For Retirement
When you get your first real job and get that first big paycheck, retirement is probably the last thing on your mind.
However, your 20s may be a time where you have a lot more room to save – you probably aren’t tied to a mortgage and have yet to start a family.
The earlier you start saving, the more you can take advantage of compounding interest. Putting more money into a retirement account (your TAP for example) or taking out a savings plan in your 20s can mean you don’t have to play catch-up in your 30s — you may even be able to retire earlier!
2. Going Into Debt To Get Married
Many of us may get married in our 20s and your wedding is one of the few times you get to be raja sehari.
However, when you look back, you likely won’t be thinking about that great wedding outfit, or how incredible that dinner menu was.
You will, however, look back with bitterness if you’re still paying off wedding loans well into your 30s rather than putting that money into a retirement account.
3. Getting A Car You Can’t Afford
A car in is a necessity for most people working in Brunei. However, a necessity doesn’t have to necessitate big spending.
Cutting back on monthly car payments means you’re putting away more money to ease your life in your 30s and onwards. Remember, compounding interest!
4. Not Learning How To Budget
Lots of people live paycheck to paycheck and it’s not necessarily because they don’t make enough, but because they haven’t learned how to manage their money.
Budgeting doesn’t mean you can’t have any fun, it only means you should budget for that fun.
Learn to put money away for food, entertainment, bills and savings and you’ll set yourself up better in life once you build these habits.
Download a budgeting app today to help get you started.
5. Living Without Insurance
When you are in your 20s, you’re at the peak of your physical health.
You hardly have any aches and pains, you hardly ever get sick and you don’t really see the need to think about your health.
As a young person, you probably think that nothing bad will ever happen to you. But investing in personal insurance can save you a lot of grief further down the road.
The small monthly or annual fees you pay for insurance will seem insignificant if an accident or emergency befalls you and you find yourself unable to work or hit with a big medical bill.
Your 20s should be fun, carefree and exciting.
Yes, we will all mess up and make mistakes, but big mistakes have compounding interest and you don’t want poor financial decisions made in your 20s to follow you for the rest of your life.
Enjoy your 20s, but don’t make mistakes that will turn your 30s (and maybe even your 40s) into a real financial drag.