5 Buying a House Too Soon
You want the quaint little house with the white picket fence, and you want to live in it the day you return from your honeymoon. But are you really ready? Your dream house could turn into a nightmare if you take out a mortgage before you can afford one. Instead, take your time and rent until you can put down at least a 10% down payment. And waiting until you have 20% is even better. With 20% down you won’t have to pay private mortgage insurance (PMI).
4 Believing the Lie That You “Have to Have a Credit Score”
You might have heard this from your parents, your college professors, your friends or the “experts” you’ve seen on television. A credit score is nothing but an I-love-debt score. It simply measures how much debt you have and how good you are at paying it back. It has nothing to do with your income or the amount of money you have in the bank. Instead of building your credit score—and debt—build wealth.
3 Failing to Save
The earlier you start saving, the more fun you’ll get to have with compound interest. If you invested $2,000 a year at 12% growth from age 19 to 26, let that money sit, and never invested another day in your life, you would have more than $2 million by age 65. And that’s all because of compound interest! In addition to saving for retirement, you need to save for big purchases and to fill up your emergency fund.
2 Forgetting You’re a 20-Something, Not a 50-Something
I can’t stress this one enough: You are not your parents! In other words, if your parents are doing well, you can’t expect to live that type of lifestyle in your 20s. Remember, it took them 30 years to get there! Once you have their level of maturity and experience, you can expect to do well. But success doesn’t come overnight!
1 Not Making a Plan for Your Money
This is as simple as it gets. You can’t fly by the seat of your pants with your money. If you want to live paycheck to paycheck, that’s fine. But if you want to build a future for yourself and your family, then you need to make a plan. It starts with a budget. Sit down every month and write out your budget on paper, on purpose. And get out of debt as fast as you can. Bottom line: Make a plan to make smart decisions with your money.
If you follow this advice in your 20s, you should have a nice foundation to build from by the time you turn 30. Don’t let the excitement and the independence you feel in your 20s distract you from making a plan for your future!
While we’re on the subject of articles from awesome people, check out Enemy of Debt’s Travis Pizel’s 5 Financial Lies We Tell Ourselves.
And don’t buy into these Top 5 False Credit Score Myths!