When it comes to money, we all make mistakes… especially in our youth. Speaking from experience and thousands of reader emails, here are 10 of the most common money mistakes I see 20-somethings making today. Are you guilty?
Do you make any of these common money mistakes?
Last week, a story about how I paid of over $80,000 in consumer debt ran on the front page of MSN.com, bringing a flood of new visitors to Money Under 30. Although the article focused on a part of my story I’m rather proud of – how I set my mind to getting out of debt and accomplished the goal relatively quickly – the other half of my financial past isn’t one I brag about. It’s the seven years of overspending responsible for creating that debt.In my daily interactions with readers, I’ve noticed consumer debt is a less common concern among 20-somethings than it was five years ago. Research supports this. Among people younger than 35, the median household debt declined 29 percent, from $29,912 to $15,473 between 2007 and 2011, according to a February 2013 study by Pew Research.That’s good. Clearly, people coming of age in the last decade saw how excessive debt was crippling millions of Americans and spawning a major recession. So fewer young people will be making the overarching mistake that ended up setting me back financially by nearly a decade.But credit card debt is far from the only money mistake we make in our twenties. As a steady stream of reader emails proves, there’s still a lot we have to learn. Here are 10 of the most common money mistakes I see young professionals making today – and what you can do to avoid them.
10. Rushing to buy a home
The allure of home ownership is powerful. After all, it’s the American Dream. And that dream is ingrained in our collective conscious. Whether we think we desire homeownership or not, culture keeps whispering that haven’t “made it” until we own a home.Try to resist until you’re really ready.I know people who bought condos and homes as soon as they graduated from college and I know people who, after 30, are renting and have no interest in giving it up and not just in New York.Although the results of the early-home buyers were mixed, the apartment-dwellers are generally happier. They have less stress, more free time and money, and more freedom.Owning a home is rewarding, but it requires time, money, and a serious commitment.
9. Borrowing money for a wedding
Emotion and money don’t mix. And few events in life evoke more emotions than your wedding day.With the average cost of American weddings surpassing $28,000, tying the knot could be one of the biggest single expenses in life after buying a home and sending a kid to college. But it doesn’t have to be.
Traditionally, lavish weddings have been family celebrations paid for the bride’s and/or groom’s parents. Being older, parents are usually wealthier than their betrothed adult kids, in which case the wedding tab, while still large, makes less of a splash.What’s happening is more people are deciding to pay for the wedding with their own meager bank accounts, but they are expecting parties on par with family-funded extravaganzas they’ve seen on Bravo reality shows. And they bridge the gap by borrowing heavily.