Your 20s and 30s are decades which are filled with milestones which play a big role in shaping the rest of your life. And when you get caught up with things like studying, travelling, finding a place to live, and deciding to have children, learning to be financially responsible often takes a back seat. However, if you get into good financial habits when you are young, they will often stand the test of time and set you on a good path as you get older. Here, we are going to be taking a closer look at a few of the biggest financial mistakes that you can make to give you a helping hand in avoiding them.
Making Purchases to Show Off
There are many purchases that you can make simply to show off. For example, you could buy yourself a fancy car or a big house when you don’t really need them. If your financial decisions are motivated by what others think about you, you are always going to find yourself trying to keep up with the Joneses. Not only this, fancy cars and big homes will require higher maintenance costs and may leave you struggling to make ends meet.
Not Setting Up an Emergency Fund
You never really know when disaster could strike, and if you are not fully prepared for it, you are going to be hit all the harder. So, you should look to set up an emergency account which contains at least six months’ worth of living expenses to keep yourself afloat if you need it. Of course, before you can save money, you will probably need to clear your debts, so take a look at debtconsolidation.co which may prove to be useful. Once you have your emergency fund established, this plays a major role in providing you with the peace of mind that you need.
Failing to Set Yourself Financial Goals
People tend to work a lot better when they have clear goals that they strive to achieve. Of course, you may have some long-term targets like saving for a comfortable retirement, but you should also have some short-term targets which are much more manageable. Write down what you are aiming to achieve and measure your progress along the way. It is very motivating to know that you are ticking off your goals one-by-one and really building towards something.
Not Learning About Finances
Just like every other skill out there, being better with money takes time and practice. There is so much free advice available online that it makes sense that you read as widely as possible to put yourself in the strongest possible position in the future. For example, rather than letting your money sit in the same low-interest savings account for months on end, you should research what other options are out there to make your money work harder for you.
It is inevitable that you are going to make some financial mistakes when you are young, but it is all about how you respond to them which is what will shape your monetary future.