Your 20s are a great time to have fun, explore and find your footing for adulthood. The problem is, you might be developing bad money habits along the way. It’s really hard not to—making lunches for work is a hassle; you’re used to paying the lowest price even if it’s not the best deal; and maybe you haven’t renegotiated your car insurance since, well, ever.
Luckily, some really easy money-saving methods don’t involve furiously clipping coupons. Here are seven money mistakes from your 20s that you can easily drop to help get your financial health in good shape.
1. Not considering how many hours (not dollars) something costs.
You work hard for your money and have lost track of how many times you’ve gone above and beyond to help a co-worker or put in overtime to finish a project. You really feel like you deserve that $400 coat you’ve been eyeing. It’s not that you don’t deserve to reward yourself, because you absolutely do! But before you drop the money, think of the item in terms of how many hours you have to work to buy it.
Let’s say you make $20 per hour after tax. That means the coat will cost you 20 hours (or half of a workweek) to buy. Do you have the cash and feel like it’s still worth it? Go for it. But if 20 hours seems like a hefty investment, it’s best to hold off.
2. Withdrawing money from an ATM that isn’t your bank.
You’re out at a restaurant or a bar with friends and want to split the bill, but you don’t have cash. Lucky for you, you spot one of those generic ATMs in the corner so you don’t have to leave and find a bank.
So what’s the problem? Although you might be willing to pay the ATM fee, your bank likely charges the same fee (or more) on top of that. That means if you withdraw $60, you might pay $2.50 for the ATM and up to $5 to your bank. You essentially just paid 12.5 percent of immediate interest. Plan ahead and withdraw money from your bank, or download a peer-to-peer mobile payment app like Venmo, PayPal or Cash App.
3. Paying bank fees.
Even though your bank is required to only have a fraction of your cash on hand and your money is essentially virtual dollars, some banks charge a fee just to keep those virtual dollars in a checking account.
On top of this, a lot of checking accounts charge a fee when you send an email money transfer, have less money than their minimum limit and use your debit card more than X number of times per month. To get around this, you have a few options: Abide by their rules and don’t use your debit card more than the stipulated number of times; Get an online bank account that doesn’t have a checking fee.
4. Not thinking of pay-per-use.
You want a new black shirt and have two choices: The $10 shirt: It’s made of low-quality material and you know it’ll fade, stretch, or wear out after four washes. The $40 shirt: It’s produced with high-quality fabric and the stitching doesn’t look like it’s about to unravel. It lasts 50 washes before it starts to lose shape.
The $40 shirt is a better investment because it costs $.80 per wear, while the $10 shirt is $2.50 per wear. The same principle applies for items like cocktail dresses, shoes, kitchen gadgets, tools, and bottled water. To get around this, buy items you can use more than a handful of times—it’s more economical and friendlier to the environment.
5. Paying credit card interest or fees.
A credit card may be a beneficial tool. Some provide reward packages like cash back, grocery points or travel reductions that may be very worthwhile. That’s the simplest in case you pay off your complete balance every month, though.
Credit card interest rates may be relatively high, and now no longer paying off your balance each month can begin a downward spiral into crippling consumer debt that destroys your finances. For example, paying the minimum price on $3,000 of debt at an 18 percentage interest rate might take 18 & half years to repay. You’ll come to be paying nearly $4,000 in interest—on the pinnacle of the $3,000 debt.
The credit card organizations have sufficient money, so why supply them more? The handiest way to that is to usually repay your complete stability each month. If that doesn’t appear to be working, freeze your credit score card in a block of ice so that you don’t use it till it’s paid off. Something else to look out for is annual fees. When there are lots of free credit cards, it’s tough to justify a $20–$200 annual fee simply to hold a chunk of plastic
7. Not thinking in terms of lost opportunity.
You’ve heard this one before: Your $3 coffee will cost $15 per week, $60 per month or $720 per year. But what other $720 thing or experience are you missing out on because it went toward coffee? That sort of money can pay for a vacation or a laptop. It can also pad your emergency savings or get you $720 closer to your big savings goals like a house or retirement.
Delivery fees, pre-cut grocery items and going out for lunches are all things that are convenient in the moment but take away from your goals.
Source:— SUCCESS Magazine.