6 Financial Mistakes I see 20 Year Olds Make

1.) Putting too much money in savings.

It’s good to have money saved in case of an emergency, but a savings account isn’t the best way to store money long-term.  This may come as a surprise, but money left in a savings account is actually losing value! Due to inflation,-although the dollar value stays the same- your money has less buying power the longer it sits. Instead you should invest some money so you not only match inflation, but gain value over time. (How Inflation Affects Your Savings)

2.) Overusing your credit card

Many college students are enticed into getting a credit card.  Credit cards are a great way of building credit, but are also a great way of building debt. Many people don’t learn how to use their credit card efficiently until they already have mountains of debt. Learn how to use a credit card before you get one. ( Should You Have a Credit Card in College?)

3.) Over-speculating

In your 20’s is a great time to invest in riskier investments since you will hopefully not need your money for a few more years.  However, it is possible to put too much of your money at risk.  The most common thing I see millennials over-investing themselves in is cryptocurrency as a get rich quick scheme.  I own cryptocurrency myself, but try to keep in a set, smaller amount of your overall investing portfolio.

4.) Not bringing in enough income

When you live at home, it is easy to live off a part-time job. Although you might not need the money now, it’s important to save and invest for the future.  Pick up a side gig or barter for a raise to bring in more income. Funnel any extra money into an investment account.

5.) Overspending

Having your own money to spend is invigorating! The sense of financial freedom can encourage some people to overspend.  Decide how much money you want to save and invest each month.  Don’t be afraid to wait a few months for something you really want to buy.

6.) Oversharing

If your friends are having financial trouble it can be tempting to loan them money so they don’t miss a fun night out.  This money adds up overtime, and you will likely not get it back.  Spend money on your friends, but know where to draw the line.

Anything you would add to the list? Let us know!

Should You Get a Sugar Daddy?

It sounds easy to have a sugar daddy, right?  Some older rich man will just pay for your company.  And you can use that money to pay for things you actually enjoy doing instead of selling yourself out to some boring job.  Unfortunately, the realities of being a sugar baby are rarely so ideal.

Being a sugar baby is NOT EASY.  For one thing, you have to have a likable personality and favorable looks.  You don’t need to be a model to be a sugar baby, but you have to keep yourself well kept up.  That’s why becoming a sugar baby is also expensive, although you can make a good amount of money, you will also spend a lot on clothes, makeup, and sometimes even travel.

If you are going to have many men after your company, you will also have to learn how to schedule your time.  This may not be a job you can easily juggle part-time.  You have to keep track of all the “gifts” the men give you and report them on your tax forms, but you can also get tax write-offs for things you deem necessary for your business.

Don’t assume no one will find out; your friends and family are likely to find out eventually.  This is not a job you should do if you want it to be a secret.  Selling your time to men for money is often stigmatized and it could hurt your relationship with jealous partners or worried family members.

There is also a safety aspect and you must be ready to protect yourself not only physically, but legally.  You can’t give out too much personal information because it could make you susceptible to stalking. Learn the laws in your state for the job.  Prostitution is illegal in many states so you must make it clear if you engage in sexual acts with these men that they are NOT paying you for sex.

Some women and men have been able to use sugar baby/daddy sites to fund college, a family, or even made it into a career.  Although it is often seen as a way to make easy money, there are many risks and drawbacks that you should be aware of before committing to the job.  If you think it’s right for you, then be prepared to do your research.

 

Have you been a sugar baby or something similar? Share your experience!

Should You Have a Credit Card in College?

I remember when my family dropped my older sister off at college seeing booths full of exited college students trying to get other college students to sign-up for credit cards.  To me, at the time, credit cards were the ultimate sign of financial irresponsibility. My dad would scoff at the students anytime one of them approached my sister. But now, as a college student who prides herself on her financial responsibility, I can give you a good guideline on when you should open a credit card for college.

Benefits of having a credit card

It’s helpful to have a credit score. It can help you with getting a good deal on loans, buying a house, or even landing a job. It also enforces good spending habits and teaches you to track your cash inflow/ouflow.

Also, having a credit card for longer increases your credit score.  The longer your line of credit has been open, the higher your credit score.

Negatives of having a credit card

If you’re not careful, any debt you have could quickly grow.  Many college students already have to worry about student loans, and don’t need the added stress of credit card debt.

So…Should you have a credit card in college?

You should get a credit card if you follow these criteria:

1.) You have a dependable source of income. (Or leftover income from a summer job.)

2.) You promise yourself to use it regularly, but sparsely.

Do not get a credit card if you want to use it to fund your way through college and expect to pay it off later.  If you have had trouble with excessive spending, practice budgeting yourself for a few months before you open a credit card.

What about for emergencies!?

Ideally, a credit card should not be your go to in case of an emergency.  Find a way to get a job and set aside money in a savings account in case of an emergency.  If you have an emergency that’s going to cost you a few hundred bucks, the last thing you’re going to want to do is use your credit card and have to deal with the interest payments.

Other Options

Become an authorized user.

If you are nervous about handling your first credit card, you can become an authorized user on your parents credit card. Before doing this however, you need to have a very serious discussion with your parents about how you will use the credit card and how they will use it.  Although parents can be quick to assume their children with start making excessive charges, if your parents start missing payments it will hurt your credit score too.

1.) Ask your parents to tell you their credit score.  Do your research on what makes a good credit score to decide how well your parents use their lines of credit.  Do not become an authorized user if you don’t trust your parents to make payments.

2.) Set a budget.  Have your parents give you a spending limit. This will get you into the habit of tracking how much you spend on a credit card.

3.) Know when to cut the cord. You can’t be on your parents credit forever.  Once you feel comfortable with your credit card, it’s time to think about opening your own.

Get a secured credit card.

Did you know there is more than one type of credit card? Secured credit cards require you to put down a deposit, the size of your deposit will then decide how much credit you can draw from. For example, if you put down a $300 deposit, then you will have a $300 credit balance each month.  Forget to pay, however, and the bank will take your deposit as collateral. Although losing a $300 deposit may seem like a lot of money, trust me, it’s better than facing the compounding interest on a regular credit card. After using your secured credit card, you can upgrade to a regular credit card.