Life is exciting for men in their 20s. If this is your case, you may have just left college, or have started your first proper job. Consequently, you have moved out of your parents’ home or are thinking of buying your own house.
If you are in a serious relationship, you may have moved in with your partner and the two of you are planning for marriage and children. Of course, you are also partying hard, and trying to fit into the middle class.
In your twenties, retirement can seem a long way off, and health insurance may seem like an unnecessary expense when you feel fit and healthy. It is no wonder that only 73% of 25-year-old men have health insurance, and only 67% have enough emergency savings to last them for three months, in the event, they lose their job.
What most young men easily forget is that with age, comes more expensive and demanding responsibilities, such as parenting. As a result, financial mistakes made in their 20s negatively affect the rest of their lives, causing most of these men to survive on loans.
Here are some financial mistakes you are probably making and need to avoid:
Moving Out Of Your Parents’ House Too Soon
Fewer young men are leaving their parent’s home in their twenties according to recent statistics. However appealing it might be to move out and get a bit of independence and freedom, many young people are now questioning whether their twenties is the right time to leave the financial security of living at home, for the responsibility of managing their own finances and paying for everything out of their own pocket.
Staying at home, where rent is cheap or often non-existent, can be a great way to build up savings for the future, meaning that you will be a bit more financially prepared when you eventually fly the nest.
Prioritizing Salary Instead Of Opportunities For Career Growth
In addition to moving out of home, men in their twenties begin their stint at the job market, and start a career. When considering job options, especially if you are lucky enough to have been given a few offers, you could be tempted to take the post which offers the most cash now.
But rather than trying to make a quick buck, you should think about the opportunities that different jobs offer for advancement, and therefore, their future earning potential, or which position is going to give you the most job satisfaction. After all, there’s no point in taking a well-paying dead-end job if you end up hating going into work every day!
Investing In Status Symbols
For a lot of young men, a car isn’t just a way to get from A to B, but also a status symbol. Consequently, several young men sadly find themselves tempted to splurge cash they don’t have on a stylish sports car, just to look good to their friends.
The fact that car loans are reasonably easy to obtain only makes this kind of expenditure more tempting, but you should try and resist the allure of an SUV and go for something a little cheaper and more practical instead.
Even better, assess whether you need to buy a car at all. If you live in a town with an excellent public transport network and few places to park, then a car could just end up being a hindrance.
Compromising Quality To Get Cheap Stuff
In a bid to save money, young men often end up buying cheaper goods that are of much poorer quality than their more expensive counterparts. In a real sense, shopping for budget items can often prove to be a false economy, especially when your cheap washing machine or cooker breaks down after just a few weeks, resulting in an expensive repair bill.
There is no need to buy top-of-the-line goods, but stick to reputable brand names and always buy from reputable stockists who will offer you a guarantee in the event of a fault. It really is true that you get what you pay for.
Failing To Plan For Retirement
Retirement can seem an awfully long way in your twenties. This is a fallacy, especially because each day takes you a step closer to retirement, and you can rest assured that one day you will have to support yourself through old age, of course being unemployed.
This means that it is never too early to start planning for retirement, through savings, investments or pension plans. Gladly, a lot of people find that their work will allow them to make contributions every month directly from their paycheck, something you should take advantage of. This is by the far easiest and most effective way of saving, and the money is never in your bank account.
Buying A House Too Soon
It can be tempting to try and get on the housing ladder as soon as possible, mostly as a result of bowing down to pressure from older relatives who will constantly ask you when you’re going to buy your first home.
What they don’t know is that times have changed from when they got on the housing ladder, though, with first-time buyers now needing a bigger deposit just to be considered for a mortgage and houses in the best areas being prohibitively expensive.
To be safe, don’t buy a house just because you think you should. Wait and do it when you have the finances to do it properly, and when the market is beneficial to your circumstances.
Taking More Credit Cards
Short-term debt, especially credit cards, can easily get out of hand if you don’t stick to your budget and pay them off as quickly as possible. Many young men think that the answer to credit card debt is to take out…. more credit cards.
These companies often offer short-term 0% deals to try and attract new customers, and it can be tempting to move your debt to one of these new cards to avoid accruing interest.
Regrettably, for you, all this means is that you have one more credit card to run up debts on. Try instead to develop a plan to pay off more of your balance every month, and once it is cleared, close the account and cut up your card.
Lack of Clear Financial Goals
It is important to set yourself some financial goals, otherwise, it can be difficult to stay motivated when it comes to sticking to your budget. Do you have something specific you want to save for? Your deposit for your first house? A wedding? Maybe you just want to buy a new car or go on a luxury holiday?
Perhaps you’re one of the more sensible twenty-something men who is planning on saving some money for his future. Whatever your goal, make sure it is something you want, and you will find it much easier to resist the temptation to spend money you should be saving. To plan better, seek the services of a financial advisor who will help you make wise investment decisions.