The 5 Worst Money Mistakes in Your 20s

                                                (Photo: PWC)

If I can only turn back the time..okay, I will admit..if I only listen to the elders when I was still starting my career, maybe I can pursue my passion now and free with whatever I want to do in life.  As I have said in my previous article The Worst Money Mistakes in Your 30s that this is the time when we have to learn from our mistakes and work for our dreams.  Oh thank goodness for failures, it's truly a key ingredient to success.

Inspired by an article on Business Insider, get on track financially by avoiding these mistakes:

1. Live above your means

Can you remember the girl in the green scarf?  Who can forget Rebecca Bloomwood, the young and beautiful young professional who fell into the trap of being a shopaholic.

(Photo: DLoves Fashion Blog)

Yes, it was a nice movie but even though it is fictional, anyone could be trapped into the habit.  It's just 5 days after you received your paycheck and your wallet is thinning down, STOP and THINK, you're starting to fall into the pit. Check and look around your stuff, you might be spending on the wrong things.

How To Avoid:  If you're eyeing to buy something but unsure if it is important or not, ask yourself if it's a "need" or a "want".  If you question it in the first place, most probably it's not important.  Learn to differentiate "wants" from "needs".  Needs are things that you need to live sensibly(not simply comfortably) your basic needs like food, shelter, clothes, medicines and wants are something that will not cause you death if you do not purchase it. It's something you want to show off (jewelry, high end phones, gadgets, etc.). 

2. Too Adventurous

 

(Photo: Adventure Austria)

Being young and full of energy does not exempt us to get ill and ignore our health.  Hospital and medical bills have proven again and again that it is the most costly of all bills and most of the time, it happens when we least expect it. Moreso, in many cases, it causes bankruptcy.

What To Do?  If you cannot control your high energy and out of this world crazy adventures, get a reliable medical insurance that can supplement your hospital needs so it will not drain your or your family's bank account.  If there are dependent people on you, better to get for a term life insurance as cushion. 

3. Not Preparing a Budget

(Photo: Hub Pages)

People in 20s are very liberating.  Ito ang panahon na natikman natin ang unang sweldo, ang katas ng ating pinaghirapan. But hold on, if we do not know how to budget the money that is coming in, we also wouldn't know where it is going.

What To Do? Buy a small notebook that you can carry anywhere you go. Before you receive your next salary, write down what you are expecting to pay - food allowance, gym monthly fee, installment payment for your new gadget, gas allowance for your car, household allowance that you give to your parents as your share to the utilities (if you are still living in your parents house, you are obligated to share with the bills, hindi na dapat hinihingi sa iyo iyan kung iisipin mo nakakatipid ka, dahil kung magsosolo ka mas malaki pa dyan ang gastos mo). On another page, create columns for 'eat out', 'gimik with friends', 'health', 'misc', or anything that you think you are spending on.  Keep the receipts then write the amount after a week on the appropriate column and get the total amount even before you spend the next salary.  You might be surprised how big you are spending on things that are unimportant.

4.  Not Thinking of Retirement

 

(Photo: Financial Post)

At this age, maybe you are thinking that retirement is way too early to think about.   Habits are formed consciously. Keeping at least 5-10% of your income for your retirement does not sound big but by starting saving for retirement in your 20's makes a whole lot different...and believe me, your children to be will thank you for that.  

What To Do? Do not depend on SSS or GSIS, open an account that will serve as your retirement fund and make an automatic transfer for a small amount from your payroll and avoid using it for any reason as much as possible. Also, visit your HR department and ask if your company is offering a pension plan where the company matches whatever contribution you are contributing as emplyee.  Don't be shy to ask but rather take advantage of these these types of claims, after all, it is your legal benefit.

5. Having No Saving Goals

(Photo: Extension UI Daho)

"If you fail to plan, you plan to fail."  

Kung wala kang plano sa buhay wala kang patutunguhan.  Simpleng kataga pero mabigat ang katumbas. Do not wait for another 5 or 10 years to realize it.  Time will come you will regret why you made a branded coffee richer than you or why you made a fruity-name company that produces the imperfect phone popular.  After 10 years, they are richer than ever while you are still employee at an office you really hate.  Start dreaming and dream big, this is the best time to work harder to realize your dream.

What To Do? Get a piece of paper, write down your tangible and intangible dreams(example: go to Graduate School, buy a house, buy a car, go to Maldives, get married) in the next 12 months, 3 years, 5 years, 10 years and open a multiple savings account for each and fund it.  Big or small amount matters significantly if you do it overtime.

(Photo: The Next Web)

If you think, it's your money after all and you deserve it, WAKE UP because you are dreaming and it might be too late when you realize that you are burning all your hard-earned money down the hole.  Your future depends on your choices when you were young.  Learn from the mistakes of the elders if you want different results.  You are the captain of your own ship and you got no one to blame if things do not work out the way you want it.

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