Now that I’m in my mid-twenties, it’s very apparent what financial mistakes my friends and I have made over the years.
It’s gotten to a point where I consistently see a variety of bad decisions being made among my peers. If you’re in your twenties, I think you can agree we’ve all made at least one of these decisions we probably shouldn’t have.
Check out the following list of bad money decisions that 20-somethings often make.
This may be the worst decision that 20-somethings make. People tend to think credit cards are free money and charge way more than they can actually afford, causing thousands of dollars in debt. I once overheard a girl in her 20s telling a friend how she is $70,000 in credit card debt from buying clothes! She better have the best wardrobe in the world because those clothes may have to last her a while once she figures out her finances.
Avoid using credit for everything, even if you’re racking up miles or points. You may have a free roundt rip ticket waiting for you, but it wouldn’t make sense to go anywhere, especially if you’re facing a mountain of debt.
Renting too soon
Living at home after graduating college can be extremely helpful when it comes to saving money. Of course most people want to move out of their house as soon as possible, but having to pay rent is a huge responsibility. If you happen to work near your home, it can be extremely beneficial to move in with the folks for a while and save some dough.
Believe it or not, the average cost of rent per month in the country ranges from $571 in Oklahoma City to $3,017 in Manhattan. That’s a pretty big range, but regardless, if you choose to live at home for even a year, you could be saving anywhere from $6,852 to $36,206 a year!
Paying off too much of your student loans, or not enough
Sometimes 20-somethings rush to pay off their student loans, which may seem like a great idea in theory, but in reality, it can actually be a bad decision. You can adjust your loan payments in accordance to your income.
Alternatively, just putting off your loan payments and deferring or not paying at all is also a bad decision.
Spending without a budget
Ah, budgeting — how much you afford to spend — what a concept, right? It’s very helpful to start noticing how much of your money goes where. If you charge the majority of your expenses, most credit card companies take out the guesswork for you and have options online in which they categorize your spending, making it easy to see what you spend the most on.
I highly recommend checking it out when you have time, it’s eye-opening once you see the stats of your spending. If you don’t use credit cards on a regular basis, you can simply look at your transactions online.
Whether you’re buying alcohol at a bar, liquor store, restaurant, or for a girl on a date, you’re probably spending too much. Buying excessive amounts of alcohol is a really bad money decision 20-somethings make. Of course it’s fun to go out and drink with friends, but it’s very easy to get carried away, especially since most bars ask for a credit card to keep the tab open. It’s easy to just tell the bartender to charge the card, or reply “yes” when asked if you want it charged on the card.
It’s hard enough to not overspend on purchases when you’re sober, let alone when you’re buzzed and feeling extra generous and happy. Spending too much on alcohol is usually something people regret the next day. I’ve never heard anyone say, “I’m so happy I spent all of that money on alcohol last night!”
If you know you’re in for a big night with friends, just bring cash and leave the cards at home. (Continued on the next page.)