Your twenties are a time of newfound power. You're coming into your own as an adult... and you're ready to take on the world.
But as the saying goes:
With great power comes great responsibility.
Your attitude toward money in your twenties will set the tone for future decades. Establish a responsible attitude and you'll reap the benefits later. With careful planning, you might even emerge into age thirty with your very own nest egg.
But we have to be real: It's all too easy in your twenties to slip into traps that will slow you down...and trip you up. Let's take a look at some common money mistakes:
That giant student loan will only get bigger if you ignore it. Your priority should be to pay off your debt ASAP. Take a long and hard look at your income; how much money can you spare each month? If you pay the maximum you can possibly pay, you'll be pleasantly surprised to see it whittle down faster than you could possibly imagine.
Living Beyond Your Means
Now that you're on a regular paycheck, it might be tempting to rent out the apartment of your dreams. Raised ceiling...rooftop swimming pool...what more could you ask for?
But spending excessive amounts of your cash on rent amounts to...nothing. When you lease, you're not getting any future equity, so don't spend too much. Instead, check off your basic requirements: safety should be number one, everything else falls lower down the list.
Sorry, we know you want the glam life. But unless you're a professional athlete or wunderkind CEO, you're going to have to live more like the rest of us.
Living Alone - If You Don't Have To
There's no shame in living at home. According to The Street, 22.5% of people ages twenty-four through thirty-six are cozy in the nest. If you have a good relationship with your parents, and they don't mind you still being at home, the arrangement might be mutually beneficial. You can contribute some money to the household coffers, and you can even make things easier for the ones who raised you by helping out around the house.
Meanwhile, you can get a big jump on your savings...and paying off your debt.
But if the idea of living at home makes you feel too claustrophobic, that's a sure sign that it's time to be on your own. Don't despair - you can probably afford to move out if you get a roommate (or two).
Just choose your roommate carefully; you don't want to be spending your saved cash on extra therapy sessions caused by a roommate that drives you crazy!
Loading up on Credit Cards
If you haven't received offers from credit card companies yet, they're coming. But don't sign up for every offer that comes your way; you should limit yourself to one or two carefully-chosen cards. More than that and you're headed for trouble. Not only will you suffer the impact on your credit score and debt load, but the burden of always owing somebody something is sure to eat away at you.
Dining Out...All Too Often
You're young, and you want to enjoy yourself. There's no shame in a nice restaurant meal, but make sure you don't go overboard. If you can, limit yourself to once or twice per week.
Bring your lunch to work with you; if your co-workers insist on socializing in a restaurant, eat your homemade lunch first at your desk, and order a small appetizer or dessert only. Eating a homemade lunch can save you over $3,000 a year... that's a nice chunk of change to remove from your student loans (or car loans)!
You don't need to completely deprive yourself to save money, but you do need to be smart about your choices. Think before you spend, and plan to save!
If you are burdened with high amounts of credit card debt and are struggling to make your payments, or you’re just not seeing your balances go down, call Timberline Financial today for a free financial analysis.
Our team of highly skilled professionals will evaluate your current situation to see if you may qualify for one of our debt relief programs. You don’t have to struggle with high-interest credit card debt any longer.