Your 20s is the perfect time to learn how to manage money well and prepare for the future financially, even if it seems like it’s still too early to be thinking about that stuff. To achieve financial security in your 20s and beyond, here are some of the most common financial mistakes that every young Filipino adult should avoid:

1. Taking out unnecessary loans

Don’t take out a loan when you’re not ready. More importantly, don’t take out a loan for something that you don’t need. For example, if you want to take out a car loan, make sure that your income can handle the repayments first. Moreover, think carefully about whether you really need the car, as well as the advantages and disadvantages related to having a vehicle of your own. Finally, look for the best car loan rates if you are going to get a vehicle through financing.

If you don’t make these considerations first, you may end up being saddled with a debt that you will struggle to pay for years.

2. Spending more than your means

During your 20s, form the habit of living within your means. Even when you see your peers going to the bars every weekend and spending thousands on shopping sprees, don’t forget your financial goals. They may be enjoying life, but are going to pay for it (literally) in the years to come. If you consistently spend only what you can, you are paving the way to financial freedom.

Let’s take a look at the alternative. If you spend your entire paycheck every month and rack up credit, your debt will start piling up inevitably. As a result, you may end up paying for it in your late 20s and beyond.

3. Not saving money

Having an emergency fund is crucial for people of all ages, so start building yours during your 20s. Once you enter the workforce, open up a savings account that you can access at any time. This fund will serve as your financial fallback in case of unexpected incidents, such as loss of employment or medical emergencies.

Using credit card to purchase4. Abusing your credit card

A credit card is a useful tool for building your credit history and paying for big-ticket items. However, many young adults tend to abuse their credit cards for unnecessary purchases, especially ones that they cannot afford.

Don’t make the same mistake if you want to avoid paying off a huge debt come your 30s. Use your credit card with care and limit your purchases every month. Better yet, use your credit card only for big items and use cash for the rest. In that way, you’re spending money that you already have.

5. Not getting insurance

In your 20s, you may not be thinking about getting insurance yet, not when you are still perfectly healthy. However, you never know when an illness or accident is going to come your way, so get health and life insurance policies while the premium is still low.

It’s okay to enjoy your 20s. It’s okay to travel, go out with friends, and treat yourself once in a while. However, it’s not okay to neglect your financial responsibilities. If you want to enjoy a debt-free, financially-secure life in the future, start adopting healthy money habits and avoiding these financial mistakes.

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