In my 20’s, I have made some financial decisions I would undo given half a chance. Here’s a list of 5 things I wish I’d known in my 20’s, which you can implement to make sure you don’t make the same mistakes.
1. Have an emergency fund.
Accidents do happen. Your car engine might suddenly fail and replacing your car engine can cost you thousands of dollars. You might suddenly become ill and if you don’t have health insurance, it can cost you dearly.
Oftentimes, you can’t predict these things and sometimes they happen when you’re least able to afford them. When they do happen, don’t rely on credit cards or personal loans, because those have outrageous interest rates.
Always have an emergency fund for these unpredictable emergencies. This fund should be kept in a separate account.
An online high interest savings account is a good option for this.
2. Investing requires patience.
The great Warren Buffett once said, “wealth is the transfer of money from the impatient to the patient.”
Investing, either in the stock market or real estate, is not a get rich quick scheme. To make money or to build wealth through these investment vehicles requires a lot of patience and persistence. Not only should you start investing at an early age, you should also have a long term perspective.
Yet, most young investors speculate rather than invest. In other words, they “invest” based on what’s hot now without doing any real research and quickly dump any stocks that are not doing well.
Or they invest based on what their friends or colleagues are investing it. And if by any chance, they accidently invest on good stocks, they quickly sell if the value of the stocks go down.
Little do they know that stocks are volatile. A stock can decrease in value one day not because it’s a bad stock, but because of other causes such as bad press. Moreover, successful investors think long term.
Whether you’re a beginner investor or an experienced one, you might need a financial advisor who takes a holistic approach to your wealth building. SmartAsset’s free matching tool can help you find one in your area.
3. Don’t underestimate the importance of your credit score.
It’s important to check your credit score at least a couple of times a year. A good credit score reflects your ability to pay your bills on time, how responsible you are with managing your finances.
It is a good assessment on how easy it will be for you to make future decisions like buying a house or applying for a personal loan.
Lenders like to see good to great credit scores. And those with these scores are rewarded with the best interest rates. On the other hand, if you have a bad credit score, not only will it make harder for you to get qualified for a loan or credit, but also if you do, it will cost you in the long run.
You also need to check your credit report to make sure everything about your credit profile is correct. Someone might steal your identity or take out a loan using your personal information. Your credit report is a great way to discover these mistakes and fraudulent activities.
4. Associate yourself with successful people.
If you want to be successful, then befriend other successful people or those with big dreams and mimic what they do. Successful people are successful because they do things very differently than what non-successful people do.
They are self-educators, they chase their dreams, they don’t quit, they’re open-minded, they are good listeners, they are creative, they don’t waste time, the list goes on.
So, if you’re yearning for financial success, expand your networks with other successful people. Do what they and you’re also likely to become successful.
5. Minimize distractions.
In a world of Facebook and Instagram, reading and answering emails, it can be hard to stay focus. To minimize distractions, check social medial or emails twice a day or at least after you have completed one critical goal in your to-do-list.
There you have it….
These are just a few of the lessons I wish I knew in my 20’s. Implement them in your life so you don’t make the same mistakes I made.
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