The big thing many young adults go through, either after moving out of their parents’ home, or graduating from college, is the freedom of the big wide world. In many ways, you are limitless in the possibilities for enjoying yourself, especially if you have a decent job which gives you a good disposable income. But we see time and time again the perils of people with this so-called disposable income, in the form of credit cards, or loans, or extending their overdrafts. The well of money isn’t as deep as you think it is. So what are the main issues to look out for during this important time of your life?

The Dangers Of Bad Credit

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When you are in your 20s, you will have a lot less responsibility, generally, in terms of dependents. So you will have a lot more money to spend on yourself and, as we all only have one life to live, we should make the most of it, which may mean going out for food a lot more, or socializing. These can eat pretty severely into your bank account, which means you borrow more money to make sure you always have a good time. The issue with this is that you are amassing debt, but also after a while the rigmarole of borrowing to cover your existing debts means you are digging yourself into a deeper hole. There will be a point that one day when you really need something, like a house, but it will be impossible to buy because no bank will touch you because you have poor credit. To get a better idea of how to support yourself through these difficult times, you can look on websites like creditrepair.co just to get a wealth of hints and tips to avoid being viewed as unreliable. But while we may not think about the big things in life when we are in our early 20s, it doesn’t take long before you start to think about them. So make sure you have the long-term at the back of your mind.

Buying “The Bargain”

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We think we are financially sensible by buying bargains, especially clothing and the like. But in buying lower quality items are we setting ourselves up for having to repurchase these items in a couple of months’ time? So it begs the question, is it better to buy high quality for a higher price, and so it lasts longer? It’s a different thing for perishables like foods, or your electricity bill, in these instances the bargain is most certainly better. So it’s important to have a keen eye on good quality items that will last that much longer. It may feel like a big purchase at the outset, but when you do the math, it will work out a lot better over time for you.

Buying Vs. Renting

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Keeping one eye on the distant future, you may feel it’s a lot easier to rent a property because the house issues will be covered by the landlord or letting agency. But you may want to think about purchasing a home, especially if you have good credit because this is a more stable method of security for you. And the fact of the matter is that a lot of people don’t have proper security in their early twenties anymore. This article on cnbc.com weighs in on the buying and renting debate if you need more facts. All in all, it is a very good idea, and yes it may be an expense up front, but it’s something that will be a valuable nest egg and is actually cheaper than renting in many ways.

Yes, our twenties are a time for freedom and enjoyment, and if you can find parts of your life to be financially sensible while still enjoying yourself, it will set you up for a more enjoyable life, in a financial sense.