7 Money Mistakes to Avoid in your 20’s

Money Mistakes to Avoid in your 20’s

Avoid these seven bad habits to ensure a smooth transition into adulthood. If that ever happens..

1. Choosing the wrong college — and major.

When choosing your major, consider your talents and interests as well as which types of careers are growing in today’s job market.

2. Being too shy to negotiate your salary. If you are given the chance to negotiate, make sure you have an idea of what your position typically pays in your city before tossing out an arbitrary number. Check out salary guides on sites like Salary.com.

3. Abusing credit cards. Running up high credit balances, missing payments and frequently opening new lines of credit can destroy your credit score. And a low credit score can limit your access to loans when you need it most, lead to higher interest rates on things like auto and home loans, and even give future employers reason to doubt you as a job candidate.

4. Mistaking youth for invincibility. According to a July study by the Commonwealth Fund, nearly 20% of 19-to-34-year-olds were uninsured in 2013. The uninsured can pay for more than one-third of their health care out-of-pocket. If you’re unemployed or can’t get health care through your job, check out plans on the Marketplace. You may qualify for tax subsidies that would reduce your monthly premium.

5. Not investing in renter’s insurance. Your landlord may have an insurance policy for the building, but that won’t include your belongings should anything valuable gets stolen or damaged. Renter’s insurance will replace your belongings in the event of a fire, flood, burglary, or some types of damage. A basic policy will cost you between $15 and $30 a month.

6. Moving to a town you can’t afford. Do yourself a solid and take the time to save at least a few months’ worth of living expenses first by sleeping in your childhood bedroom for a couple of months. Or consider renting a cheap place with friends while you save. Try a cost of living calculator to see what you can expect in different cities.

7. Not saving for retirement. Start small. If your employer offers a 401(k) plan, sign up for it and contribute at least 6% of your paycheck. The good news is that you have one of the greatest assets of all on your side — time. Thanks to the power of compounding interest, the money you save in your 20s is potentially worth way more than anything you will set aside in your 30s and 40s.

(Source: Yahoo! Finance)  

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