We have all made mistakes with our money at some point but it's especially easy
to make these mistakes when you are fresh out of school and trying to figure
out life as a twenty-something. These are 7 money mistakes that you want to
avoid making in your 20s. Welcome back to the channel if you're new, hi, hello
welcome. I'm Suzanne with Arvabelle and if you're not already subscribed to the
channel, consider subscribing for more videos on money and mindful living and
don't forget to hit that like button. So mistake number 7 which is
actually one of the most common ones is expensive cars. A lot of times especially
in our 20s we see people around us like co-workers or our friends buying new
luxury vehicles. But before you go and buy one for yourself you want to
consider all of the costs associated with buying a new vehicle. There's
maintenance there's car insurance and there's just the payment on the car
itself. New cars are a severely depreciating asset which just means that
when you drive that new car off of the lot, it's worth a whole lot less. Even if you
were to immediately turn back around and go back to the dealership, they would not
buy that car back from you at the price that you just bought it for. Either
drive the car you already have, if you do need a new vehicle buy it used, or if
you are lucky enough to live in one of the few places in the U.S. that has good
reliable public transportation, just use that instead. Don't make the mistake of
letting a luxury car you can't afford drain your bank account. Mistake number
six is no money down financing offers. Now these are very very tempting, and
they're pretty much everywhere. You see these in mattress stores,
furniture stores, even around Christmas time department stores have
financing options and usually these are not a good deal at all and they will
actually end up hurting you in the long run. So with these offers they will make
you some too-good-to-be-true deal which it is. They'll say you put no money down
and you make a small small payment of $60 a month for the next eternity and in
these offers, in the fine print they put a bunch of confusing clauses that
basically allow them to raise the interest rate on that payment that
you're making. And many times that rate actually ends
up being higher than interest that you would pay on your credit card - which you
shouldn't do that either! But it's a pretty bad deal. And that is why these
companies push those financing options so hard is because that is how they're
able to make a lot of their money, off of interest that people really aren't able
to keep up with. These no money down financing offers are a very very easy
way to get sucked into a very high amounts of consumer debt, so if you can't
afford it upfront, just don't buy it. You can save up for it. It may take you a few
months or a few years but you really don't need that instant gratification of
new furniture if you cannot afford it. Mistake 5 is signing up for way too many
subscription services. So I get it, subscriptions are nice, they're
convenient, they're supposed to make our lives easier, and the amounts don't
really seem like that much for monthly subscriptions but those small amounts
add up and they will leave you wondering why you have no money left at the end of
the month. So between all of your streaming services, all of your
subscription boxes and all of your memberships to like to gyms or places
like that, take a good look at that and start evaluating where you can maybe
consolidate subscriptions and combine them, or where you can just cut them out
completely. Number 4 is taking on excessive
student loan debt. So if you're already out of college, there isn't really much
that you can do, you're just going to have to pay it back. But when you're paying it
back, make sure that you are meeting those monthly payments, and always
contribute a little bit extra if you can. So the faster that you can get that paid
off, the quicker you're going to be reducing that interest amount that you
have left to pay. If you are still in college, if you can, start making payments
on your loan before you graduate - that's always a good thing to do. But if you
don't really have that option just be proactive in reducing costs. Take basic
courses at community college, rent textbooks off of Amazon because you
probably won't need them, and don't blow your bank account going out every night.
If you think you want to continue your education and do grad school, make sure
that you're doing it for the right reason.
If you're enrolling simply because you don't really know what else to do, take
some time to consider if that is in your best long-term financial interest - and
sometimes it will be and that's great. Just make sure that you are going and
paying that tuition for the right reason. And if you're not in college yet and
you're on the fence about it there are plenty of high-paying jobs that don't
necessarily require a college degree. College is definitely worth it for a lot
of people, but it's not the only option out there and there are ways to get a
higher education don't require you going into a tens of thousands of dollars of
student debt. Mistake number 3 is not caring about your credit. I have a whole
separate video on this which I will link up in the cards, but basically if you
ever want to buy a house, a car, take out any type of loan, or even sign a lease at
a nice apartment complex, you're going to need a good credit score and it takes a
little while to actually build that up. It's easier to build up a good credit
score from the very beginning than to try and fix a bad credit score. So the
general gist of credit scores and using credit cards is pay your amount on time
and in full every single month. Credit cards are not just magic money. That is
money that you owe, so don't buy anything on a credit card that you can't actually
afford. Mistake number 2 is leaving money in cash or in a low-yield savings
account. This is the easiest one to fix and if you take nothing else from
this video, go and open up a high-yield savings account. It's so easy it takes
like 5 minutes to do. So basically if you are just letting your extra money or
your emergency savings sit in cash or sit in a low-yield savings account
that's earning you 0.01% interest, it's time to open up a
new bank account and to transfer that money into there. Interest rates are
getting a little bit more competitive, and I know that there are some companies
that have cut back a little bit recently, but I would say that around 2%
interest is a pretty standard rate. It may not seem like that much, but say you
have $5,000 in an emergency savings account. That can be
earning you, at 2% interest, $100 a year
you don't even have to do anything for that except for set up the bank
account. When you sign up for a high-yield savings account, just make
sure that it's with a reputable bank that is FDIC insured, make sure that you
read everything and all the terms. Especially because at some banks to get
a better interest rate you will have to have large amount of money in there.
But I know that there are plenty of options available that don't require any
minimum balance to earn that 2% interest. So mistake number 1, the biggest
mistake of them all, is not investing when you are in your 20s. If you're
not investing now, you could be missing out on thousands or hundreds of
thousands of dollars in compounding interest. So how can you start investing?
See if your employer offers 401k matching, sign up for a Roth IRA, research
stocks that you'd be interested in buying, learn about real estate, look into
getting a financial advisor or a Robo advisor, but most importantly just
educate yourself about investing. There are hundreds and hundreds of articles
and books and videos on this channel and just all over the internet that can
teach you how to invest. By no means do you have to be an expert, but it is
important to start learning about investment opportunities and taking
advantage of things that you see value in and saving for your future. I hope
this video was helpful, remember to subscribe to the channel and check out
our videos on credit score and investing. I hope you guys have a good day and I
will see you next time.