Healthy financial practices should start at an early age. Understanding how to spend and save your allowance during your adolescent years are the building blocks to spending wisely as an adult. But because some may not have had the same financial teachings imparted on them, they might be at risk of committing some money-related mistakes as an adult.
Luckily, it’s never too late to side step or correct these mistakes, even when you are an adult. Here are some of the most common money-related mistakes to avoid in your 20s.
1. Not having an emergency fund
Emergencies happen. This is a fact of life, and at times, it can be a costly one. It’s important to have an emergency fund set aside so that in the event of an emergency (such as a burst pipe or a dead engine), you won’t have to dip into your savings.
Every month, put a little bit of money aside as a reserve, and before you know it, you’ll have a healthy emergency fund. An even easier way to do this is to set up a monthly automatic withdrawal from your chequing account to your savings account.
2. Not taking advantage of your job benefits
Most jobs offer benefit packages to their employees. This can include partially- or fully-covered medical and dental. Familiarize yourself with what your company benefits are providing for you, and make sure to take advantage of those coverages so that you aren’t paying for such things as prescriptions out of your own pocket.
3. Not managing your finances
While it’s important not to obsess over finances, taking too laid back of a stance can lead you into trouble—like debt. Some live comfortably paycheque-to-paycheque, but with a little bit of organization and finance management, you can avoid debt and also grow your savings.
4. Subscribing to too many things
From Netflix to yoga studios, these subscriptions and memberships can cost you a lot per month. Reassess what you’re charged for each month and see what you can cancel or if there are cheaper alternatives.
5. Not asking for discounts
Asking for discounts can feel awkward, but you can actually save a lot by doing this. Many of your monthly bills can be renegotiated so that you pay a lower rate. Such companies include cell phone and cable providers.
6. Not investing soon enough
Since investments take time to grow, you can make the most out of them by starting early. The best time to start investing in your future is now, so do it today rather than later.
7. Not maxing out your RRSPs
If you’ve invested in an RRSP (a retirement savings plan), you should try to max out your RRSPs every year. Since contributions to RRSPs are deductible (meaning they can be used to reduce your taxes), any income you earn in the RRSP is tax exempt so long as the funds stay in that account. The deadline for 2018’s tax contribution is March 1, 2018, and the dollar limit is $26,010 (for 2017 tax year).
Healthy financial practices are never too late to incorporate into your life. Even if you currently have a poor credit score, avoiding these mistakes or correcting them can help your financial situation.
In the event that you’re having trouble managing your finances and maintaining a positive credit score, urLoan can help you rebuild your credit and regain financial health sooner through our loans. Our approvals are based on employment and verifiable income, unlike any other traditional means of credit score used by such institutions as banks, or taking security on your assets.
Learn more about how urLoan can help you with loans and call us at 1-855-723-5626.