College is over and it's time to enter the professional world of “adulting.” One of the most important aspects of being an adult is understanding how to handle your finances, but many people make common mistakes that cause them to spend money they shouldn't and could even set them up for financial disaster. Are you making the same mistakes?
Having Credit Card Debt
People in their 20s who have credit card debt pay an average interest rate of about 16 percent. When coupled with the fact that most young adults pay off the minimum balance each month, you could be looking at paying off credit cards for more than a decade. While a credit card can help you build credit, you should never use it excessively. Charge only small amounts and pay the bill off in full each month.
Keeping Up With the Joneses
Whether you're newly married and want to feel like you're on par with the newlyweds next door or you simply want to have the next best thing just like the guy in the next cubicle, always buying the latest and greatest technology is sure to put a dent in your wallet. If your smartphone is still in perfect working order, don't purchase the newest just because it has a larger screen or some other arbitrary feature. You don't really need the largest TV or multiple gaming platforms, either.
You don't need to go without the things you like and want, but buy them in proportion with your budget. If you really must have a big ticket item, save up for it instead of putting it on a credit card or taking from your savings.
Not Using Your Employee Benefits Package
If your company has you making payments towards your retirement, health care, or some other benefit, be sure you know how to use them. For one thing, many people feel as if it's taking away from their income, but in reality, it's contributing to their future income. Be sure you know how to access your retirement accounts and learn how to use your insurance.
Even if your company doesn't require you to pay into these things, you should look into them if they are offered. Taking money out of your account for retirement before you even get paid is one way to ensure you don't spend the money elsewhere with plans to “save it later.”
Not Purchasing Insurance
Spending money on insurance necessary and could save your financial sanity down the line. What if you get into a car accident? What if your home or apartment gets damaged or broken into? What if you get really sick? All of these are situations that seem unlikely, but if and when they do happen, you’ll appreciate the insurance that helps you pay the resulting bills. Not having insurance can wipe out your savings or leave you completely financially ruined in some cases. If you aren’t sure what you need, an insurance agent can help you learn more about it.
Whether you are graduating soon or you already have a career, home, and family, understanding how to make the most of your finances ensures you are protected and safe now, in a decade, and much further down the line.
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