9 Money Mistakes to Avoid in Your 20's

20’s bring the most radical transformations in our lives. College gives way to jobs, pocket money gives way to salary, college restrictions give way to freedom and for some, affairs give way to marriage. But significantly we also experience transformation from spendthrift days of college to financial freedom of job. But alas this freedom sometimes wreaks havoc to our financials. So here is a ready list of 9 mistakes to avoid in our 20’s.

1. Over Indulgence on Credit Card 
   
   While over indulgence is anyhow a blunder to your money management, committing it with your credit card is blasphemous. Apart from atrocious interst rates (3-4% monthly) , a credit card default may mar your ability to borrow money in future as it gets recorded by banks in your financial prudence record known as SIBEL score.
2. Absence of Financial Management 
   
   A scientific Financial Management can not only eliminate reckless spending, but also brings more financial stability and peace of mind.
3. Paying too much Income Tax
   
   While it is hard not to pay any income tax, but it can be easily brought under limits by certain actions. (Click Here to know how can Income Tax be minimised)
4. Investing all money in ‘Safe’ Instruments
   
   In 20’s one can easily afford to invest in avenues which have longer gestation horizon like stocks etc. Even if one want to invest in ‘safe’ avenues, Debt Funds provides returns which are more tax efficient than Fixed Deposits, still almost as much safe.
5. Investing in LIC Policies for saving tax
   
   One of the biggest blunder is to invest your 100 Rs in a bad investment like LIC policies to save 20 Rs on Income Tax. Try to explore ELSS or NPS which give higher returns in long term.
6. Not Buying Enough Life Insurance
   
   Life Insurance ensures continuity in life for the family in the event of unforeseen death of the earning member of the member. (Click here to know about different kinds of Life Insurance products available and Click Here to calculate how much life insurance you need.
7. Retirement Planning Delay
   
   If you wonder how come retirement should be planned so early, click here to understand how hundreds are converted to thousands and thousands to millions, if you start early. Latest in the domain of retirement planning is the product known as Annuity.
8. Not buying Health Insurance
   
   An unforeseen hospitalisation can have catastrophic effect on your life’s savings. Buying an adequate health insurance covers you against such events.
9. Not Planning Enough Liquidity
   
   Unforeseen events can through very big challenges on liquidity front ,in case you have not planned for it. So invest in a manner that ensures proper liquidity.

Still have query on any of the above topics? Drop an e-mail to healthynivesh@gmail.com. Subscribe to our Facebook Page Healthy Nivesh to keep getting Moneywise.