With high school and college behind you, it’s time to strike out on your own. Your twenties are often a time of discovery. You try out different college majors, various jobs, and even friends to see where you fit. As you find your place in the world, you start to look further ahead to meet the challenges for both today and tomorrow. With that maturity, you also start to address areas you have neglected.
A few habits you should eliminate before reaching 30 include the following:
Not Keeping an Annual Appointment With Your Doctor
You are young and healthy, and many skip those annoying doctor visits. By 26, you cannot piggyback on your parent’s policy and must apply for your own health coverage or pay an annual tax penalty. Many Millennials just pay the penalty, thinking they are saving money. With wages rising, it is good to consider insurance, even if you select a high deductible plan. The good news is that all plans cover the essentials including mental health care. High-deductible plans also provide preventative care (along with an annual physical) with no co-pay or deductible costs. So even if you are very healthy, take an hour for an annual check up. A surprising number of young adults get illnesses they do not anticipate.
Not Putting Down the Smartphone
You can multitask, understood. However, the number of deaths due to texting and talking on the phone while driving is rising sharply. Also increasing are the number of deaths from pedestrians, so enamored with phone activity, they get hit and killed by vehicles. The numbers are staggering. 1.6 million accidents (approximately 25%) are due to phone use while driving. There was also a 10% increase in pedestrian deaths, due to cell phone use while walking. It is now the leading cause of death in teenagers.
With technology continuously moving forward and an endless array of apps, Millennials seem to have smartphones attached to the palm of their hand. Phone use reduces actual live conversations and can impact both work and personal lives. Know when to put the phone down and interact with others or focus on a task. Phone calls and texts can wait.
Maxing Out Your Credit Card
When credit lines are small, it can seem harmless to buy that new television or iPad. Yet after college, those $300 limits quickly rise to $3,000 or more. Add multiple cards to the picture and maxed out credit cards can lead to thousands in debt, and hundreds a month in high-interest payments.
The other place young people get trapped with debt is the easy access to products through small monthly payments. For example, when you have an account with a cell phone provider, they will offer to upgrade your phone for a mere $25 per month. While the company no longer locks you into a contract, you agree to pay the monthly minimum for two years or more, essentially requiring you to stay with the same company. You also wind up paying $600 for a phone you can get for $200 elsewhere.
Maxing out credit can limit future credit options and reduce your credit score significantly. With employers, landlords, and other parties regularly using credit history and credit scores to make decisions, you must pay attention to any activity that negatively impacts these numbers.
Delaying Educational Pursuits
Whether this means finishing the college degree you started or working towards an advanced degree that will lead to a better-paying job, now is the time. The longer you wait, the harder it will be to return to school. Once you buy a home and start a family, the higher cost of living can prevent a return to school, even though it would lead to higher paying employment. When you delay education, you also find there are fewer years of higher income needed to pay for student loan debt incurred to achieve the degree.
Unfortunately, 40% of those enrolled in a University or Community College will leave school before earning a degree. While college can be expensive, in order to gain the benefits of school, you must finish. Even one credit shy can limit job opportunities.
Only Maintaining One Account
Keeping only a checking account typically leads to spending everything you make. When you spread money around into different accounts, you can organize finances, and save for specific goals.
Banking is a topic many Millennials don’t understand. They did not enter college with checking accounts and credit cards. Due to more stringent credit requirements, many have resorted to prepaid cards to manage finances. These cards can be wrought with high fees and do not offer the necessary features to build a stable financial future.
Checking accounts are good for receiving direct deposits and acting as a holding cell to pay bills. They are not the best product for building financial security. Dedicated savings or money market accounts pay interest and separate money so you can see growth. Consumers use savings accounts for an emergency fund, Christmas fund, vacation fund, or other short-term goal. Retirement accounts and investments are the best product for long term needs.
It is always good to develop a habit of saving. Take a percentage of your paycheck and direct deposit, or set up an auto transfer, into a savings account. You should only touch the money for planned purchases and needs.
Burning Through Money
Independence gives you the ability to purchase anything you want. It can also lead to a habit of shortsighted spending that prevents you from accomplishing your highest aspirations. Begin to make financial decisions based on your long-term desires rather than the flavor of the day. When friends encourage you to splurge, resist, and consider better alternatives.
Job security and career advancement are not as secure as they once were. Changes in the economic reality mean higher levels of financial insecurity. With the exit of pensions, the worker is now responsible for preserving finances and paying for retirement. All of these factors put a higher burden on you to consider the needs of tomorrow rather than spending everything today.
Investigate good uses of your money, carry adequate insurance, prepare for emergencies, and you’re your retirement.
The decisions made today will affect your tomorrow. While the impact may not be immediate, the consequences are sure to come when you least expect it. Before you move into your third decade, establish positive habits which will take care of your financial future the remainder of your life.