We never appreciate the carefree years of childhood until we are met with the challenges of adulthood. As adults, we are greeted with responsibilities and stress along with a lot of bills. Since good money choices are taught, many of us who enter adulthood could be feeling a little lost when it comes to financial decisions we now have to make on a daily basis. The money choices we make as we enter adulthood greatly affect our financial future years down the road. It is important to be smart with money now so here are some top money mistakes to avoid as an adult.
Mixing Money With Family And Friends
One of the biggest money mistakes to avoid as an adult is to borrow money from a family member or friend or on the flipside to loan money to a family member or friend. The truth is that mixing the stress of owing a loved one money can be a huge strain on that relationship. If you loan out money to a friend or loved one you also might feel resentment toward them if they fail to pay you back. Another money mistake to avoid is to co-sign for a loan for a loved one when they make a purchase like a car. If they fail to make payments, you are not only responsible for the loan but your credit score can take a huge hit too.
Many young adults feel like the only way to purchase anything is to take out loans. Financing furniture, electronics, and even vacations may seem like a good idea to many adults but the truth is that all of that financing equals digging yourself into debt which can be hard to get out of. Before you purchase anything with credit, really determine if it is a need vs. a want. Yes, paying for that trip to Hawaii with plastic may sound enticing but paying for that trip for months (or even years) down the road can be a tough pill to swallow.
Mismanaging Student Loans
Once you graduate college it is almost certain that you will have some student loans to pay off. Many students take out the maximum amount of student loans that they are approved for which can be a huge mistake. A lot of students also get their loans financed through private companies versus through a federal loan program. There are always pros and cons to pursuing a federal student loan consolidation, but one of the pros is that you may be able to get a lower interest rate that can save you hundreds of dollars a year in interest rates.
Adulthood is tough enough as it is without being bogged down with debt from the start. Avoid lending money to or getting loans from family members and friends to prevent relationship damage, slipping into the habit of paying for everything on credit, and making some mistakes in managing your student loans. By not making these common money mistakes you are setting yourself up for an ideal financial future.