20s and their choices: Money mistakes you can avoid to grow richer

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By: Phil Bradford
on 17th Nov,2015

To grow rich, you need to save more and not earn more. Make good choices with your money and you’ll thank yourself later.
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At this age of yours, you probably have the Great American Dream to get rich and famous, and have all that it takes to call a life well-heeled. But, commit the following three financial blunders and all your financial dreams will go into a tail-spin!

The choices you make today will affect your tomorrow, especially when you’ve retired. Hence, to grow richer just make every effort to stay away from the following money mistakes.

But before getting into that, you need to ask, ‘is life so simple?’ The answer is ‘No’.

Why? Here’s your answer: Understand how your money is related to you.

It is very likely that you might have to change some of your monetary habits. And for that to happen in a disciplined manner, you’ve got to follow this strategy:

  • Add up all your earnings.
  • Subtract that figure with your expenditures made over the past three months. Call it your 90-day number.
  • If your number is positive, then congratulate yourself for the feat. This is because you’re making more money than what you spend.
  • If your number is negative, then you need to work hard to get that in the positive.

Do not get disheartened, as the best is yet to come. Now make sure you avoid the following financial blunders to make yourself richer and financially independent:

  1. Never drown in credit card debt - Believe it or not, excessive spending habit is actually a disease. And speaking of credit card debt, then it’s cancerous. The moment you fall short of paying your balance in full, you let the disease grow into you. So, the next time you come across your credit card bill, don’t ignore it, rather go through the details and take a hard look at the fine prints. As per the law, credit card companies need to inform you about the number of years it’d take you to pay back all the outstanding balances, if you continue making the minimum payments.

    Considering, credit cards come at a steep rate of interest (around 16% on an average), it’s much more than a black hole of debt that would keep on gulping down your dollars. The best way to deal with them is to use every spare penny in your pocket to pay them off every month.
  2. Never look down upon frugality - When you are dealing with your debt, then make sure that the process of debt elimination doesn’t become tasteless or a burden midway through it. The same thing happens to people who’re starving themselves to lose some stubborn fat and get fit as a fiddle. The fact is they resume eating junk foods after months or weeks of abstinence from such calorie-rich foods. So, try to create a fund for joyful purposes only. However, to be true, this isn’t the proper way to live.

    In case you want to get rid of your debts, you may have to follow some strict austere measures (frugality) but that certainly doesn't mean you’ll deprive yourself of the good things you can still afford, at least judiciously. Yes, the key to happiness is spending well within your budget. You can always have fun - use your recreation fund to pay for your restaurant bills, a leisure trip, a spa session or whatever you like, but make sure you pay for that outright.
  3. Never shy away from savings - Yes, you need to get the better of your emotions, especially when it comes to emotional spending. Build up your emotional intelligence. This’ll help you in making the correct decision when you’re upset. A lot of men and women of your age spend too much just to amuse themselves and to get over their own life’s disappointment, only to aggravate their financial condition further into a mess.

    And if you’ve been doing this, then you are using a toxic combination that’ll kill you sooner rather than later. Avoid shopping when you’re upset and instead, opt to go for a long walk or cook a dish for yourself or even you can read a book. This way you’ll get the time and tenacity to bounce back without breaking your bank.

Financial matters have always been complex for people like us. If you don't gather enough knowledge about how to manage them, then your money will manage you.

It often becomes difficult for newlyweds to manage money. But, money mistakes can loosen your knot.

Check out: Newlyweds: Money mistakes can loosen your knot

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