“Money can’t buy happiness. Money isn’t everything.” There are so many quotes that try to deflate the importance of money. Likewise, there are a lot of images in pop culture that promote bad money habits. But the financial decisions you make, particularly in your youth, can affect you for the rest of your life. So before you spend all of your salary, here are the biggest financial mistakes to avoid in your 20s.
1. Accumulating debt
The credit market is experiencing a rapid growth in Nigeria, and loan apps are sprouting up on app stores. But accumulating debt is a very dangerous thing because you can lose a lot of money in interest. Focus on increasing your credit score and don’t borrow unless you ABSOLUTELY need it.
2. Not saving money
One dangerous mistake you can make is not saving money. It is unwise to live from hand to mouth and then run around when something bad happens. You have to set some money aside in case of emergencies. You don’t want to be stranded if your car breaks down or you get robbed.
3. Not saving for retirement
If you’re in your 20s, you are probably just building your career from the ground up. But don’t assume it’s too early to think about your retirement. You can start now to plan for the distant future. When it comes to the future, every little thing helps. Most people don’t start thinking about retirement until their mid-30s. If you start now, you’ll be a whole decade ahead of your mates!
4. Not investing
Someone once said, “simple people save, smart people invest”. Apart from the money you set aside for emergencies, you have to have an amount you are growing for the future. Find a credible means for your money to work and grow for you. This provides a soft landing for when all else fails.
5. Following trends
In today’s world, we are constantly inundated with trends and movements. There are more ads than ever, and the internet is an ever-expanding platform for capitalism. Don’t let the era of materialism get to you. Stick to what you like and don’t be swayed by fickle trends that drain you of your hard-earned money and leave you with regret. The only person who can have an opinion of you is the person that pays your bills: YOU!
6. Choosing liabilities over assets
Even when you choose to buy important things, you have to ask yourself if what you are buying appreciates or depreciates over time. Things like cars depreciate in value from the minute you start driving them. They also require a lot of money for fueling and maintenance. This is not to dissuade you from getting a car. This is just to make you prioritise assets over liabilities. Instead, focus on acquiring landed properties that appreciate over time.
7. Not getting insured
It is a popular saying that, in Nigeria, you are just one serious illness or unfortunate incident away from abject poverty. Bad things are a part of life and can cost you a lot of money. But don’t let them destroy all your years of hard work. By getting insurance, you can recover easier if unfortunate events come your way. Whether health, automobile or even renter’s insurance, getting insured is never a bad idea.
One really big financial mistake to avoid in your 20s is not having a budget. Most people just tackle every single need and want as they arise and end up having no memory of how they spent their money. Don’t be one of those people. Build strong money habits now to secure your future.
