The 12 Biggest Financial Mistakes To Avoid in Your 20s

1. You don’t negotiate your wage when you first start a job.

That’s right, I said it! The majority of you are unwilling to discuss your salary.

Mostly because you’re afraid you’ll come across as aggressive and lose the job.

I’d like to remind you that, first and foremost, you have nothing to lose if they don’t hire you. Because you are now unemployed and looking for work. Alternatively, you may have a job and are simply looking for new opportunities.

Second, you must establish the tone of your relationship with your boss from the beginning.

After asking for a pay negotiation, a good employer will go to any length to get you on board, knowing that your fearlessness will be an advantage to their company’s growth.

So be well prepared the next time you have a job interview and negotiate your wage.

You might be surprised at how far these firms will go if they are prodded.

2. You don’t have a clear picture of your expenses.

“You can’t manage what you don’t measure,” according to a popular saying. This is a statement I abide by because how do you even begin to estimate how much money you’re spending? You won’t know if you’re overspending, underpaying, or on track if you don’t check your spending.

Budgets are used by the wisest and most successful people among us. No, I’m not talking about simple rough draught budgeting. It’s all about comprehensive budgeting, with a price connected to each payment or spending. They don’t even have to blink to account for all of the money they’ve made in the last three years.

Budgeting is the key to achieving success. I recommend that you attempt making a solid budget within your means and see how much of a difference it makes.

3. You are not generating income in your spare time.

Given how hectic most of our occupations are, we often just want to relax or squander our free time doing pointless stuff.

On weekends, we play video games with pals or go out dancing, sometimes just after work. Many of us are unaware that we are squandering our valuable time. We could have used that time to earn some extra money.

If you want to be successful, you must separate yourself from this financial blunder.

Take up a pastime in your spare time and turn it into a source of income.

You may pet-sit, bake cakes, or even provide catering services at events. You may be able to supplement your income, but only if you are eager to improve yourself. Why not turn your side hustle into a full-time job? I have an idea: wouldn’t a bakery uptown with your name on it be fantastic?

So, what’s keeping you from achieving your goals?

4. Unnecessary spending YOLO is a term that we all live by.

We’re all programmed to believe that we earn money in order to spend it. So often, you’ll find yourself going over budget because, after all, who doesn’t deserve a first-class supper after a long week?

That isn’t such a good idea because it merely depletes your bank account.

You must realise that money serves four purposes:

To put money into something

To be spent

To be saved

To be given away

Your spending on just one of these criteria demonstrates a lack of financial awareness.

You’ll gradually max up your credit and end up in serious debt without even realising it. Cut back on tiny purchases here and there because they pile up over time. This brings us back to the topic of constructing a workable budget.

5. Panic selling investments

This section is for those of you who have progressed a little farther in your financial education. They’ve started making investments, such as stock purchases. 2020 came as a huge shock after such a huge move forward. A pandemic that devastated economic growth and caused nearly every portfolio to lose 30% of its value.

Because it was such a large loss, there were several waves of panic selling in a single week. They’re worried that stock prices will continue to fall and they’ll lose money.

When it comes to equities, the scariest but smartest method is to buy and hold.

You must avoid the temptation to short-change oneself, regardless of the short-term changes. This method will help you achieve inconceivable riches in the long run.

While also limiting your temptation to check your account balance on a regular basis.

6. Lack of an emergency fund.

For many people who are conscious of their expenditures, money management has remained a major problem. Assume you want to spend your money wisely.

In that situation, having an emergency fund to cover time-sensitive unexpected bills is a good idea. Can you now afford the cost of obtaining treatment if you become ill, or are you covered by a health insurance policy? If you don’t have either, be aware that you’re on a potentially perilous path. Some financial experts, on the other hand, advise deferring and preferring to settle debts before establishing an emergency fund.

From my perspective, the sensible option is to save as little as you can comfortably save without jeopardising your debt payment. After all, if you save a dollar every day, you’ll have around 365 dollars at the end of the year.

Don’t you believe that will help you deal with some of your current financial problems?

It does, in my opinion.

7. Purchasing everything using a credit card

Credit cards are something we despise. Why wouldn’t we, given how they’ve managed to make life both easier and tougher at the same time? It’s simpler because we can buy things we can’t afford now and pay for them later.

However, at the cost of some interest. However, because so many of us have mismanaged our credit, it makes life more difficult. We are now deeply in debt. I tell you that buying food and gas on credit is a bad idea because you are paying interest on each of these products.

In a nutshell, this means you’ll have to pay more for these things.

Furthermore, this style of spending has a tendency to cause you to lose track of your expenditures.

To prevent paying late fees, make sure you pay your credit card payments on time.

To minimise the extra expenses, limit your credit card purchases to average-sized goods.

8. Failure to set up a credit monitoring alert.

In terms of money, there are good credit and bad credit, both of which can leave you in debt for the rest of your life. To add insult to injury, identity theft and other forms of fraud have become more frequent in recent years, with a slew of hackers on the loose.

You should set up a monitoring alert in conjunction with identity theft protection services to keep yourself protected from servicing credits you are unaware of.

In terms of money, there are good credit and bad credit, both of which can leave you in debt for the rest of your life. To add insult to injury, identity theft and other forms of fraud have become more frequent in recent years, with a slew of hackers on the loose.

You should set up a monitoring alert in conjunction with identity theft protection services to keep yourself protected from servicing credits you are unaware of.

9. Lending Money

This is a common financial blunder among twenty-year-olds. But don’t panic; the good news is that as you get older and learn more, you’ll grow out of it.

Don’t fall into the trap of trying to be liked by your friends by lending them money.

It will leave you begging people for money, miserable, and with shattered relationships, particularly if you are trying to make ends meet. You’ll be seeing them spend money on vacations and new clothes all the time. While you consider how they may have utilised that money to repay you. Save yourself the misery and hold on to your pocketbook with both hands, especially until you’re financially secure enough to say goodbye to your money without crying.

10. Having unrealistic goals

We all wanted to be princesses and princes when we were children.

We didn’t know how humans became these things, and we didn’t care. But we’ve grown up and can no longer live in our delusional delusions. That is why everyone of us must strive for the highest possible profit while drawing a clear picture of where we want to be in ten years.

Also, a very clear and adaptable road map for getting there.

If you want to transform your mansion, complete with a red BMW, into a reality, you’ll need a financial strategy. You may even utilise a vision board if you’re feeling very imaginative. This will increase your motivation to fulfil all of the objectives you’ve set for yourself.

If you need to save money to achieve your goals, place that money in a separate account so you don’t touch it.

11. Allowing the lifestyle creep to occur on you.

Don’t you understand the sense of entitlement that comes with earning those extra bucks if you’ve ever been broke?

When you have money you worked hard for and come across something you couldn’t buy previously, it’s a strange feeling. We need to be able to distinguish between our necessities and wants, and if you earn that raise, it’s not the time to start looking for a bigger house or new jewellery.

Why not invest in short-term ambitions that will renew your wealth rather than wasting money on items you don’t need?

I apologise if I offended you, but if you don’t have a financial plan in place, you’ll end up drowning in the same financial disaster as everyone else. I understand that penning down a strategy may seem tedious, but it will save you from a slew of financial blunders that you would not have been able to avoid if you didn’t have one. Can you say no to a day out in your spare time?

That’s why you won’t be able to resist spending a few dollars from your paycheck on anything unrelated. Follow this advise if you want to avoid making these money blunders this year. It will be quite beneficial to you.

12. Not taking out insurance.

This is for you if, like me, you fear picking up your iPhone after dropping it for the hundredth time. Take out coverage for your phone, television, health, and school loans. It normally just takes a modest amount of water to keep you afloat in the middle of a shipwreck. The onset of the coronavirus is the best example of this.

Many people were impacted since they lacked the financial means to pay for their medical care. Employers, employees, and business owners have all been hit hard in the last two years. Consider the type of umbrella that those who purchased company insurance had at the time.

Be sensible and take advantage of some of the free services that insurance companies provide to their customers.

In conclusion, it is critical for us to be aware of the financial mistakes we make. And how to prevent them in the future if we wish to be financially independent.

Share this with your friends and family to prevent them from making the same financial mistakes you did. You’ll be surprised at how much of a difference breaking these behaviours will make in your and their life.