The beauty of being in your 20s is the license to screw up. No matter how poorly you conduct yourself personally, professionally or financially, you can chalk it up to youthful inexperience and take comfort in the knowledge that you’ve got plenty of time to set things right before the ink on your Grown Up Card has fully dried.
The ugliness of being in your 20s is the possibility of wasting potential. No matter how well you conduct yourself personally, professionally or financially, you’ll be forced to compare yourself with others who are doing it all better than you, setting themselves up for success in ways you will always struggle to match.
But not to worry. The key to success in your 20s is to simply stumble through them while not being too stupid. Think of the decade as one long night out drinking. Have your fun, take your opportunities, but don’t get thrown out of any bars or do anything that can get you tossed in jail. Here are five mistakes that many people in your 20s will make, but you can hopefully still avoid:
Marrying before you’re ready.
By the time you’re in your later 20s, it seems like everyone you know is getting married. When you’re in your 30s, it seems like everyone you know is getting divorced.
Those who get divorced are willing to trash their credit and hurl their financial situations into turmoil not because they’re dumb, but because they are so sick of their awful marriages that they will embrace freedom at any price.
The only sure way to avoid joining the latter category is to just avoid taking the plunge in your 20s. While that’s not realistic for those in serious relationships, the least you can do is acknowledge — rather than brush aside — any serious doubts about insanely costly nuptials.
Maxing out credit cards.
Credit cards make it all too easy to live beyond your means, and it’s easy to see why it’s so tempting to succumb to their siren song. You’ve suffered for years as an impoverished student, then finally have landed a decent job, and plastic gives you access to so much that you’ve denied yourself. Just because you can suddenly blow $5,000 on a dream vacation, though, doesn’t mean you should.
Make sure you use credit cards — taking advantage of cash-back offers and consumer protection — but don’t let them use you by saddling you with mountains of debt.
Letting your parents co-sign on stuff.
This goes back to those who are fresh out of college and newly employed who feel it’s time to buy a car or house. Even if your income is high, your credit history may be so slim that banks insist that you add a cosigner to guarantee a loan.
Don’t do it.
Not only will you be minimizing the benefits to your own credit by taking on a cosigner, you’ll be stretching your parents’ resources thin by reducing the amount of credit they’ll be able to access for themselves, as well as introducing a giant wedge that could give you and your folks one more thing to argue about. Should you be laid off, your parents will be on the hook for your payment, and will most likely let you know about it.
Stay independent, save up a big down payment and wait until lenders are willing to take a risk on you alone. Don’t worry. You and your parents will still have plenty of other stuff to bicker about.
Sticking with an unfulfilling career rather than tactically retreating.
“At least it’s a paycheck” can become a damning refrain that others will tell you, and you will tell yourself, to stick it out through an awful job. The time for suffocating yourself professionally in the name of a paycheck comes when you are middle aged and saddled with mortgages, car payments and a family that relies on the income.
Take advantage of the freedom and flexibility of youth by telling your boss to shove it (politely), then regroup and pursue something else. If your next career of choice demands it, go back to school, armed with professional experience and the ability to be saddled with even more luscious student loans. Which leads us to the final mistake to avoid:
Going overboard on student loans.
Unfortunately, too many 20-somethings screw themselves with unmanagement student loan debt by pursuing a degree at any cost.
Go for grants whenever possible in grad school, even if you didn’t qualify for them as an undergrad. Fill out a FAFSA to see if you can shake down the government for some free money to help you pursue your master’s in Greek mythology.
Even if you managed to rake in grants and scholarships, you’ll probably need to take on more loans to fund your education. You’ll be offered more money than you need, so be sure to budget how much it will take to get by and adjust your loan amount accordingly before you sign. Your mid-30s self will thank you for not saddling him with more debt, because he’ll need all the resources he can manage as he goes through divorce.
What money mistakes do you see your 20-something friends making now?