When you’re in your 20s and 30s, you think you’ll have all the time in the world to save, plan for retirement, and worry about the future.  But the truth is, if you don’t set yourself up financially during this crucial time in your life – it may be too late by the time you realize that you should’ve started much earlier.  Read on to find out the important financial decisions you should start thinking about as soon as you land that first full-time job.

Mistake #1 – Not contributing to your retirement. Start saving for retirement when you start your first job. Don’t make the common mistake of thinking retirement is too far away and you only have to be saving for immediate needs at this point. The end result – you will often wind up spending your entire salary, if you don’t make payroll deductions going into your savings.  It’s important to start saving for retirement while you are young, so you can get ahead.  If your employer offers a retirement plan like a 401(k) – oftentimes you can make direct contributions (a percentage of your salary that you set right from your paycheck) to go into a retirement fund, and you won’t even know the money is coming out of your paycheck.

Mistake #2 – Buying more car than you can afford. Be careful about thinking that just because you are now working and have a full-time job in the real world, that you can afford to buy a luxury vehicle, take elaborate vacations, or purchase an expensive new wardrobe.  But they’re work clothes and will be put to good use, right?  Wrong.  Create a budget for yourself, buy only what you actually “need,” and stick to your financial plan.

Mistake #3 – Not starting an emergency fund. Do not put this off, because you think you won’t need it.  Always plan for the unexpected.  What would happen if you lost your job or an emergency situation occurred – would you have enough in savings to pay rent, make car payments, or pay your bills?  Saving for that rainy day is extremely important.

Mistake #4 – Living on credit cards. Many 20 and 30-somethings play the dangerous game of living high on credit cards and emptying any savings they have from the previous month to pay for it. Credit cards can cause someone to live paycheck to paycheck and rack up enormous debt if you aren’t careful.  If you do need to use a credit card, try to use it sparingly and pay the bill each month.  Don’t live outside of your means.

Mistake #5 – Not setting financial goals. Stop to think about what you might like to do in five or ten years. Do you want to own a home? You might not be thinking about it right now, but should you get married and decide to purchase a home, don’t you want to have some savings from your working years to contribute? Be sure to save something (even if it’s not a huge amount), and set some financial goals for your future. Your future home may very well be the biggest purchase of your life, so it’s definitely important to start saving as soon as possible.

Mistake #6 – Trying to keep up with the Joneses. Don’t make the mistake of thinking you have the funds or budget of your parents. They most likely have a different budget than you and it may very well have taken them over 30 years to accumulate what they have, and you probably aren’t at that point yet. Live within your means – and stick to a budget of what you can afford.

Mistake #7 – Not starting the habit of paying yourself first. Save first – save something, even if it’s a small amount, and then concentrate on your bills. When you simply pay only your bills and leave nothing for your savings, it will take a long time to catch up. Save AND pay your bills – you’ll stay ahead of the curve.

Mistake #8 – Owing too much in student loans without learning about career prospects. Be careful about what you choose as your major and the price tag of the college you select.  Will there be jobs available in your field when you graduate, to help you pay down those student loans?  For example – going to an Ivy League school and majoring in say, Philosophy – is that really practical?  What will you do with that degree after graduation, and how will you pay for it?

Mistake #9 – Going into debt for a wedding. With wedding costs skyrocketing, it makes sense to manage this event carefully. You don’t have to elope to cut costs; there are plenty of ways to have an awesome day for a fraction of the price. Try Pinterest, for starters.

Mistake #10 – Not carrying health insurance. The young feel invincible, but all it takes is one small accident to start the downward spiral of medical bills.  And we’re not talking a couple thousand – we’re talking potentially tens of thousands of dollars.  Be very careful of this one!

If you start out on the right foot in your 20s and early 30s – set and stick to a budget, save some money, and prepare for your future … you’ll be smooth sailing into your late 30s and beyond, and prepared for a rainy day and your future retirement.  Though you might not be thinking about all of this now, if you don’t prepare – when the time comes you’ll truly wish you had, and it will be difficult to catch up (if ever).

However, if you’re reading this article in your late 30s and 40s and you’ve made some of the mistakes listed above – First Financial can help.  We encourage all our members to stop in and see us at least once a year to have an annual financial review with a financial representative. 

Don’t forget to think first – and think savings!

Article Source by Suba Iyer: http://www.foxbusiness.com/personal-finance/2014/02/26/money-mistakes-to-avoid-in-your-20s/?intcmp=trending