5 money mistakes 20-

somethings should
avoid
Why should you wait until you’re old enough to save? Doing so will just make you feel more
pressured.

Being 20-something is tough. You look for a decent job, save up for your dream house
and try hard to please your parents. Being a young adult is a confusing rollercoaster
ride.

If you’re 20-something, chances are you may feel that you’re not ready for the "real
world" just yet. Therefore, you are prone to committing money mistakes that can cost
you your dreams, your slim bank account, and even your relationship with your loved
ones.

You’re in good company. I know what you’re going through.

Don’t be a victim. Equip yourself with information by reading this guide specifically made
for you.

1. Falling into the trap of lifestyle inflation.

You can either be a fresh graduate or a senior employee – the amount of your salary
doesn’t matter! What matters is where your salary goes.

Does it happily go to investments? Is your bank account healthy? Is your investment

portfolio progressive?

Or does your salary sadly go to luxury purchases? Do you have a love-hate relationship
with your bank account? Do you have any idea what an investment portfolio is?
Believe me, I’m not trying to sound like your mother here. I’m trying to sound like a
concerned friend.

Having money that you worked for really lets you feel that you’re in absolute control. So
does this mean that with your new job, you immediately need a new condo, a new car, a
new set of clothes and a new gadget to go along with it?

Absolutely not.

My friend, if you start falling into the mindset that you need the latest things just
because you can afford them, then you will find yourself mistaking this materialistic
pleasure as happiness. If this is the case, then you’re going to be stuck in a never-
ending cycle of fake bliss.

This cycle of fake bliss is incredibly expensive.

Advice: Don’t depend on your possessions for your happiness. All new things get old
after a while. You will never be contented.

2. Thinking of credit cards as 'free money.'

Did you know that major credit card companies have a list of young adults who they can
contact as soon as they’ve landed their first job? Expect that nagging phone call. These
companies would call you up and tell you that you’ve met their “requirements” so you’re
eligible for a credit card account.

What are the basic requirements for a credit card account?

Seriously, if you have disposable income and are willing to pay out-of-this-world interest
rates if you failed to pay your monthly dues, then you’re qualified!

My friend, your credit card is not free money. It’s a piece of plastic that you use to buy
things that you can’t afford at the moment. It makes you buy impulse purchases just
because you can.
I have a friend who used her credit card to buy a toothbrush. The toothbrush was P108.
She thought the interest would just be minimal so she neglected to pay her dues on
time.

After a while, she finally decided to check on how much she owes. She used her credit
card to buy one toothbrush. She never used it again but she never paid her balance as
well. Now, she owes P3,500.

That’s a difference of roughly P3,400! Do you really want to shell out extra cash just for
the sake of instant gratification?

Advice: If you don’t have the self-discipline to pay your monthly dues on full and on
time, I suggest that you refrain from even opening a credit card account. Don’t even
think about it!

3. Ignoring the importance of budgeting.

The idea of budgeting seems overwhelming, I know. Some friends of mine take the
concept of budgeting to extremes.

Some of them have charts, graphs and Excel recordings ofeverything up to the single
centavo.

And the others? They don’t even have any idea of how much they spend every month!

I’m in the middle ground. I know budgeting is crucial.

After all, how can you treat a disease if you can’t even diagnose it? How can you find
your way if you don’t know that you’re already lost? How can you solve your problem if
you’re not even aware of its existence?

However, I’m not that extreme – I believe in having a basic spending and saving plan.

Advice: Why don’t you try implementing the 60-20-10-10 rule? Out of all your take-
home income, 60% should go to your living expenses, 20% is for your personal saving
goals, 10% is for your retirement, and 10% is for giving back to the community.
Here’s a template that you can get started on.

4. Failing to invest in yourself.

Just because you’ve finished college doesn’t mean that you should stop learning
altogether. Actually life after college is the best time to continue your education! No one
will be around to encourage you to improve yourself, so you should have the initiative to
pursue personal development.

Don’t mope around and expect that you will grow magically when you’re not really
exerting the right amount of effort.

Also, don’t think that you can’t afford to spend money on personal development right
now. At the end of the day, you’re not really spending your money – you’re investing it.
You will reap the rewards in the future so be patient.

Advice: Attend seminars on how to expand your job eligibility. Network with relevant
people in your dream career and learn from them. Take up a new language. Apply for
scholarships abroad. Enroll in cost-effective courses that are related to your industry.
Read inspirational books!

5. Neglecting precious opportunities to start saving up for retirement.

When talking with people in the same age range as I am, I just can’t seem to stress the
topic of retirement enough.

Get this: we should start saving up for retirement while we’re still young so that we can
enjoy the reward when we’re already old!

When we start early, we can afford to invest small amounts because we have more
time. This makes sense, doesn’t it?

Warren Buffett once said, "The rich invest in time, the poor invest in money."
I mean, come on, why should you wait until you’re old enough to save? Doing so will
just make you more pressured. Plus, if you wait until you’re substantially old, you need
to invest larger amounts of money because you’ll have less time!

Advice: Sure, enrolling yourself in SSS is a common plan of action. However, don’t just
be content with this pension plan – you should move one step further and start investing
in the stock market. If you still have 10-20 years before retirement, putting your
retirement account in the stock market as an investment, not as a trade, is the best
option, in my humble opinion.

Keep these tips in mind to help you take on the real life. Your older self will thank you
for it.

Are you ready to take on the real life, then, colleagues? –Rappler.com

Lianne Martha M. Laroya is a pro blogger, advocacy writer and freelance copywriter
committed to producing compelling content for passionate small and medium
enterprises. A nurse entrepreneur, Lianne believes in winning at all aspects of life so
she founded The Wise Living.

Connect with her on Twitter: @MsLianneLaroya