The 4 Financial Mistakes to Avoid in Your 20s

For most young professionals, your 20s are the years when you (finally!) start making some money. But, they’re also the years when, if you aren’t careful, you can make some money mistakes—ones that can (literally) cost you.

But staying on top of your finances is far from impossible. We’ve outlined four of the most common money blunders you might be tempted to make and how you can dodge them—and set yourself up for financial success in your 20s and beyond.

1. Credit Card Craze

Many recent grads think they can charge what they need or want now, then pay it off later, once they’re making more money. Problem is, paying off credit card debt is always harder than you think it’s going to be, and in the meantime, those high-interest cards and large balances can lower your credit score.
To prevent getting into more debt than you can handle, stick to only one or two good credit cards , and keep your balances below one-third of the available limit (or ideally, at zero).  If you’re already overwhelmed by your credit card balances? Take control now . Rather than signing up for another card to get more credit, call your current card issuer and ask for an increase in your limit or a reduction in your interest rate.
If you can, set a deadline for your financial goals (i.e., I want to pay my cards off in two years so I can buy a new car). Even if all you can do is stop putting more on the cards while you’re making your minimum payments, stick with it!

2. Skipping Student Loan Bills

Many recent grads find themselves burdened by student loan debt on their entry-level (or non-existent) salaries and falling behind on their payments, which is a big problem. Going into forbearance or default on student loans slashes your credit score—and can even prevent you from getting a job (some employers run a credit check pre-hire).
To avoid this, make some smart moves: Consolidate your loans if you have any at variable interest rates, and set up an automatic draft from your checking account to make sure that the payment is taken care of each month (with federal loans, this will save you 0.25% on your interest rate). If you’re out of work or having trouble making your payments, talk to a loan representative about your repayment plan options.

3. Late Pay Laziness

I know it’s tough to stay on top of everything while you’re working like crazy, but don’t allow yourself to get into laziness mode with your bills—late fees are a totally unnecessary and preventable expense! And unfortunately, missing your due dates is a cycle you’ll struggle to get out of—you make one late payment, you get charged a fee, you fall behind the next month because you can’t pay the bill and the fee, repeat.
If you’re not paying your bills because you don’t have the money, start by setting up a budget so you can weed out any unnecessary expenses. Then, make sure the bills are always paid on time by setting up automatic drafts through your service providers or with your bank’s automatic bill pay. For bills that aren’t online (like your rent), set up calendar alerts to keep you from overlooking a due date.

Read the full article at: Kristen Cox, themuse.com

October 02 2017 By Kristen Cox, source: themuse.com Financial Planning