Money Mistakes To Avoid In Your 20’s
‘Adulting’ Is Hard, But These Money Mistakes Will Make It HARDER!
//Do Not Purchase A New Car//
Even if you can afford one, or think you can afford one, always purchase a pre-owned, slightly used vehicle. I suggest at least 5 years old.
What no one tells you is that cars depreciate as soon as you drive them off the lot. It’s the worse investment you can make in your 20’s. Instead, use Kelley Blue Book or Edmund’s to do thorough research on a make and model of car that most suits your lifestyle, meaning a vehicle that accommodates your needs, not wants. Your car should cost in the low thousands and shouldn’t put you in substantial debt. If you do take out a loan, ensure that it’s a low-interest car loan that uses the vehicle itself as collateral. Tip: Credit Unions have lower interest rates than banks!
If you have made the mistake of purchasing an expensive car, consider these two options.
- Selling it. Trust me, someone is eager and able to buy that car right off your hands. There’s ALWAYS someone.
- Use that vehicle to make cash. Still can’t part ways with your beloved? Consider using the car to earn extra money on UberEats, Postmates, DoorDash and InstaCarts. There are many YouTube videos that show you how to maximize your earning potential and make hundreds. If your country does not offer these services, consider starting a delivery service on your own. You’d be surprised by how this business blossoms.
//Selling Property//
Generational wealth is a hot topic. But many don’t realize they’re sleeping on a gold mine. Though this may not apply to everyone, consider this advice if you fall into this category.
Some children will inherit land after their parents pass away. It may not be a lot in terms of acres but please know, land of any size is gold!
Land is one of the few assets which appreciate in value! Many persons make the mistake of selling land when they fall on hard times or put it up for collateral for investments they aren’t sure about.
Whatever you do, do not sell your land.
I can assure you that a wealthy person will attempt to undervalue your property and buy it for a fraction of what it’s really worth.
Resist this temptation.
When you or your offspring are in a better financial place, your land can be used to create sustainable and profitable income properties. Duplexes are a great way to continue living on your land mortgage-free! But, duplexes and income properties are a whole other topic for another post.
Other assets that do not lose value or are slow to depreciate are jewelry and art. Also, if you have an old typewriter or rotary dial telephone, do not sell or discard them. Twenty years from now, they can be auctioned off for thousands of dollars. Old chinaware and pottery, as well as coal pots, also fall into this category. A good rule of thumb, if you cannot find it anywhere else online, DO NOT SELL!
//Investments… For Beginners//
No matter how small, investments you make now will pay off in the long run. You’re a far cry away from retirement. Time is literally on your side.
Though the yield is slow, speak to a bank representative about CD’s. A CD is a savings account that yields higher interest rates than your typical savings account. However, you must leave the deposit alone for a substantial period without withdrawals.
This is a good way to get your foot in the door for investments. Some other ways to begin investing is through apps such as RobinHood and Acorns. Once you’re comfortable with these, you can start looking into more profitable means of growing cash.
NB These are investment options for beginners. There are more profitable (and riskier) ways to invest.
// High-Interest Credit Cards//
No matter how tempting, high-interest credit cards ALWAYS turn around and bite you in the behind. So, avoid them at all costs. That’s it. No fancy language or witty explanations. Just don’t do it.
But if you did bite the bullet, just remember, slow and steady wins the race.
Halt all automatic purchases on your card and commit to paying a little over the minimum payment each month.
//Getting Caught Up In Not Having A Savings//
I know, I know. We’re frequently taught how important having a savings is. Yet, many millennials do not have 10% of their salary, or 6 months worth of income saved up to assist them when times get tough.
However, do not make the mistake of losing sleep over the lack of a savings balance. The truth is, many persons are not in a position to save what is required. Persons who write blogs on savings take for granted that people are doing what they can with what they have.
That being said, be gentle with yourself. Do not focus on the amount you are saving, focus on consistently saving what you can. That may be 3% to 5% of your income, and for many persons, that really isn’t much. But, rest assured, you’ll eventually get a handle on your income and expenses. When you do, you will be able to save a substantial amount.
For now, the goal is to get into the habit of treating your savings just like taxes or tithe. That way, when you do have a better financial footing, saving will come naturally to you.
//Not Having A Budget//
Budgets sound scary, I know. They don’t have to be. Open up a simple excel sheet. Type in your gross income. Under your gross income, type in your expenses from highest to lowest. Total your expenses. Subtract the total expenses from the income then, voila. You’ve just created a simple budget.
NB Take it a step further by leaving the money for your expenses in a separate bank than your savings account. Yup, it makes a difference.
I know some may have more complex budgets, but if you’re a newbie to money management, all you need is a visual idea of what you have, and what you don’t have. This sets the foundation for more complex money tasks like taxes, investing and savings.
I hope this article proves helpful to some 20 something year old out there. Adulting is hard! But guess what? You GOT this!
Chin up!
Love, SylJoe