Your 20s are a great time to have fun, explore and find your footing for adulthood.
The problem is, you might be developing some bad money habits along the way. It’s really hard not to—making lunches for work is a hassle; you’re used to paying the lowest price even if it’s not the best deal; and maybe you haven’t renegotiated your car insurance since, well, ever.
Luckily, there are some really easy things you can do to save money that don’t involve furiously clipping coupons. Here are seven money mistakes from your 20s that you can easily drop to help get your financial health in good shape.
1. Not considering how many hours (not dollars) something costs.
You work hard for your money and have lost track of how many times you’ve gone above and beyond to help a co-worker or put in overtime to finish a project. You really feel like you deserve that $400 coat you’ve been eyeing.
It’s not that you don’t deserve to reward yourself, because you absolutely do! But before you drop the money, think of the item in terms of how many hours after tax you have to work to buy it.
Let’s say you make $20 per hour after tax. That means the coat will cost you 20 hours (or half of a work week) to buy. Do you have the cash and feel like it’s still worth it? Go for it. But if 20 hours seems like a hefty investment, it’s best to hold off.
2. Withdrawing money from an ATM that isn’t your bank.
You’re out at a restaurant or a bar with some friends and you want to split the bill, but you don’t have cash. Lucky for you, you spot one of those generic ATMs in the corner so you don’t have to leave and find a bank.
So what’s the problem? Although you might be willing to pay the ATM fee, your bank likely charges the same fee (or more) on top of that. That means if you withdraw $60, you might pay $2.50 for the ATM and up to $5 to your bank. You essentially just paid 12.5 percent of immediate interest.
Plan ahead and withdraw money from your bank, or your bank’s ATMs that are usually set up in malls or convenience stores.
3. Paying bank fees.
Even though your bank is required to only have a fraction of your cash on hand and your money is essentially virtual dollars, some banks charge a fee just to keep those virtual dollars in a checking account.
On top of this, a lot of checking accounts charge a fee when you send an email money transfer, have less money than their minimum limit, and use your debit card more than X number of times per month.
To get around this, you have a few options:
- Abide by their rules and don’t use your debit card more than the stipulated number of times.
- Get an online bank account that doesn’t have a checking fee.
4. Not thinking of pay-per-use.
You want a new black shirt and have two choices:
- The $10 shirt: It’s made of low quality material and you know it’ll fade, stretch, or get a hole after four washes.
- The $40 shirt: It’s produced with high quality fabric and the stitching doesn’t look like it’s about to unravel. It lasts 50 washes before it starts to lose shape.
The $40 shirt is a better investment because it costs $.80 per wear, while the $10 shirt is $2.50 per wear. The same principle applies for items like cocktail dresses, shoes, kitchen gadgets, tools and bottled water.
To get around this, buy items you can use more than a handful of times—it’s more economical and friendlier to the environment.
Related: 9 Smart Spending and Saving Tips
5. Paying credit card interest or fees.
A credit card can be a useful tool. Some offer reward programs like cash back, grocery points or travel discounts that can be very worthwhile. That’s only if you pay off your full balance every month, though.
Credit card interest rates can be incredibly high, and not paying off your balance every month can start a downward spiral into crippling consumer debt that destroys your finances. For example, paying the minimum payment on $3,000 of debt at an 18 percent interest rate would take 18.5 years to pay off. You’ll end up paying nearly $4,000 in interest—on top of the $3,000 debt.
The credit card companies have enough money, so why give them more? The only solution to this is to always pay off your full balance every month. If that doesn’t seem to be working, freeze your credit card in a block of ice so you don’t use it until it’s paid off.
Something else to look out for is annual fees. When there’s plenty of free credit cards, it’s hard to justify a $20–$200 annual fee just to carry a piece of plastic.
6. Agreeing without asking for better terms.
It can be uncomfortable negotiating. In fact, one study showed that only 37 percent of men and 26 percent of women feel confident negotiating.
There are two easy tactics that can be used without much stress:
- Call three or more businesses and ask for a quote. It’s surprising how the same offering can be priced so differently.
- Just ask. Sometimes it’s as easy as saying, “Do you think you can give me 15 percent off?”
What’s the worst that can happen? On a scale of 1–10, where 1 is the salesperson saying no and 10 is a catastrophic argument, it’s at worst a 3 even for the most anxious of us.
Some things you can negotiate are credit card interest rates, mortgage rates, car loans and any type of insurance.
7. Not thinking in terms of lost opportunity.
You’ve heard this one before: Your $3 coffee will cost $15 per week, $60 per month or $720 per year.
But what other $720 thing or experience are you missing out on because it went toward coffee? That sort of money can pay for a vacation or a laptop. It can also pad your emergency savings or get you $720 closer to your big savings goal like a house or retirement.
Delivery fees, pre-cut grocery items and going out for lunches are all things that are convenient in the moment but take away from your goals.