Let’s be honest. Being an adult isn’t always fun. In fact, sometimes it’s just downright hard. Not only are you tasked with forging a successful career and handling real-life responsibilities, but you also need to get the hang of the ins and outs of managing your own finances. Successfully managing your own money can be a little overwhelming, especially if you aren’t armed with the right knowledge and training. Sure, you probably had an allowance as a kid. But, deciding between purchasing that S Club 7 CD or those pink glitter jelly shoes isn’t quite the same as understanding interest rates and planning for retirement.
So, you may just be thrown into the world of overseeing your own finances, all while feeling like you don’t quite know what you’re doing. Money management is a learning process, and you’re bound to hit a few bumps in the road. But, there are a few things you should definitely avoid doing in your young adulthood, in order to set yourself up for a successful financial future. Here are seven money mistakes to avoid making in your twenties, at all costs (pun intended).
Disregarding the future
I’m totally in favor of the “live for today” mentality that encourages adventure and spontaneity. But, do you ever think about what comes after today? Tomorrow. Planning your financial future sounds like something only old people need to worry about. However, you absolutely need to think about your long-term goals and financial strategy in order to successfully manage your funds for the long haul. Do you want to purchase a home soon? Do you ever want to retire? What are you going to do if you unexpectedly lose your job?
Sit down and determine your future plans. If you’re aiming to purchase a home soon, start setting aside money to make that happen. If you worry about job security, start contributing to an emergency fund that can cover a few months of your expenses if you find yourself in unfortunate circumstances. It’s never too early to start thinking about retirement, so begin contributing to a 401(k) or an IRA. Whatever your future goals are, you need to make sure that your finances can support them. So, be proactive and start planning now.
Not setting a budget
Setting a budget goes hand-in-hand with determining your future financial plan. It can be all too easy to lose sight of your income versus your expenses on a monthly basis. So, it’s crucial that you take a hard look at your monthly income and your average expenditures in order to establish a personal budget.
Think of your budget as the roadmap of your monthly finances. It will keep your spending under control—particularly if you’re somebody who tends to blackout shop in Target—as well as ensure that you’re being smart with the rest of your money. Many people equate the word “budget” with “restrictions”. However, that doesn’t necessarily need to ring true. Be realistic when setting your budget. If you enjoy going out to eat several times a week and are able to financially support that habit, then work that into your budget to ensure that your plan will work for you and is something that you can stick to.
Setting a budget doesn’t mean cutting out all of your fun and frivolous expenses. It’s just a way to keep you on track.
Relying on credit cards
I’m sure you’ve heard many warnings about the dangers of credit card debt and that I don’t need to drone on and on about it. However, treating credit cards like a personal loan program can be detrimental to your financial well being, so I couldn’t just leave it off the list. Do whatever you can to prevent racking up a large balance on credit cards. The interest rates are astronomical, and you’ll quickly find yourself in a hole that’s nearly impossible to climb out of.
Many people say that it’s important to establish a good credit score when you’re young, and I won’t refute that statement. Good credit is important, but you can establish it without spending beyond your means. Plus, how do you think your credit score will look when you’re $30,000 in credit card debt?
Refusing to demand what you’re worth
Whether you run your own business or have been on your fair share of job interviews, we all know how awkward it can be to discuss payment with a potential employer or client. Sometimes, it’s just easier to accept what they offer and call it a day. But, you simply can’t be afraid to demand what you deserve.
People typically don’t fork over extra cash without being prompted, and negotiating will always be a little awkward. However, a moment or two of uncomfortable conversation is well worth the increased dollars in your pocket. So, suck it up and demand what you need.
Using money to show off
When we spend a good chunk of our lives on social media, comparison becomes way too easy. It can be tempting to fall into the “keeping up with the Joneses” trap and start purchasing expensive things just for the sake of showing everybody that you have them. Your value and self-worth aren’t directly correlated with your finances; so don’t feel pressured to use money as a tangible indicator of how fantastic your life is. You don’t need to buy that round of drinks for everyone or have the latest iPhone. You’re fantastic regardless.
Getting your first job and your first paycheck is exciting. You’re allowed to feel pumped about it, and even treat yourself to something special. But, there’s a big difference between celebrating and going on a reckless spending spree. Trust me, irresponsible spending is a bad habit to get into.
Establish a savings account and get yourself into the routine of putting away a certain percentage of your paycheck early on. Many employers offer a split direct deposit system, where a certain amount is deposited to your checking account and the rest immediately goes to savings. This is an easy way to build up decent nest egg, without ever being tempted to spend the money. Out of sight, out of mind—it’s an effective strategy.
Thinking that money is everything
I have news for you, money isn’t synonymous with happiness. Some of the wealthiest people in the world are actually pretty miserable. So, don’t confuse “success” with “money”. Success involves so much more than just your finances. Does your job fulfill you personally and professionally? Do you have fantastic friends and family members that make you feel loved and appreciated? Do you make time for hobbies and interests that you enjoy? If you answered yes to those questions, then you’re already pretty darn successful.
Yes, responsible money management is important. But, money isn’t the be-all and end-all of a wonderful, happy life. You need to stay on top of your finances. But, you can’t forget to go out and enjoy the fruits of your labor every once in a while!
This article by Kat Boogaard originally appeared onThe Every Girl.