5 Bad Financial Habits In Your 20s That Will Make You Poor In Your 30s

5 Bad Financial Habits In Your 20s That Will Make You Poor In Your 30s

Do you think you have bad financial habits? As a 20 year old the moment you get money, you are thinking of how to spend it on movies, lunch, clubbing, clothes etc.

How you handle your finances in your 20s will determine what sort of lifestyle you will have in your 30s. So it is important to have good financial practices.

Luckily there are simple ways you can get rid of your bad financial habits so that you that can get back on the right track financially.

Here is a list of bad financial habits and what to do to change them.

1. Lack of proper planning

Sadly most young people do not think of their financial future. Instead they are living in the now. Which means, they are not making any plans to grow financially.

Very few 20 something’s think about saving and investing. They spend their salaries as they come which means they never have any extra cash.

Most people believe that being wealthy is having a nice car, expensive phone and buying designer things. However, this is a sure way of not getting rich.

Instead of spending your money on these things, one should save and go into wealth creation. Good investments will eventually give you the finances to live a luxurious lifestyle without having to work too hard for it.

Tip

Make a savings budget and stick to it. Ensure you always put something away to use later on in life. You can then decide what to do with the money.

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2. Taking loans to fund a lifestyle

Other than proper planning the mistake most people make is taking loans to buy things that will not add monetary value or taking a loan to buy something that will not pay back the loan.

A good example is taking a loan to buy a car. Although, owning a car will make your life much simpler because you get to avoid the hustle of matatus and bad weather, this comes with extra costs.

A cars value decreases with time and usage so you will sell it at a loss. Owning a car also comes with costs such as insurance, fuel and maintenance fees.

Therefore you will end up using all your money to pay for the loans and for the upkeep of your car.

Tip

Instead take a loan to buy land or a house. The value of land always goes up and if you sell it at a profit you will be able to pay for the loan and make money in the process.

When it comes to houses you can rent out the house and let the money from that pay for the loan and afterwards you will have extra income.

3. Spending your on friends

This is something a majority of people suffer from. Most people want to show off to their friends or your friends want you to take them out every Friday because you have a source of income.

You will never save any money if you are always spending it on friends and drinks. Therefore it is important that you set a limit on how much you can spend on friends every month.

Use that money to start a business instead.

4. Being too comfortable with income from one source

Yes your salary is enough for you right now because you do not have a lot of obligations. However, you will never become rich from your salary alone.

You need extra sources of income. You can have a part time or free lance job , start businesses. Nowadays you can even run an online business and still be able to work full time.

5. Poor time Management

What is the point of spending hours playing video games when you could be using that time to do part time jobs or learning a new skill?

A new skill will look good on your CV and part time jobs provide income whereas, video games provide enjoyment for a period of time.

It is not wrong to relax for a few hours but you should not spend the whole day doing nothing. You can take a few hours to relax but then a majority of your time should be spent doing things that enable you to grow.

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Proper financial planning and management is the only way to ensure you are living a comfortable life when you get to your 30s.

By Michelle Wanjiku