The 13 dumbest things to do with your money in your 20s by Tanza Loudenback on Jun 1, 2017, 12:40 PM Advertisement
 Your 20s are a critical decade when it comes to managing your money. Time is on your side when you're young, and a head start in saving and investing can result in massive financial gains down the road. To get on track financially, start by avoiding these 13 common mistakes. Original reporting by Kathleen Elkins. SEE ALSO: 7 stupid things people do with their money that feel smart at the time DON'T MISS: 13 pieces of money advice you can't afford to ignore 1. Living above your means.  Earning your first paycheck is liberating and thrilling. But as you begin to get raises, spending can tend to creep up as well, until we succumb to lifestyle inflation: living up to the ceiling of what our income will allow and thus failing to save for the future. How to improve: Set up automatic savings to contribute a percentage of your paycheck to your 401(k) or investments before you even see it. When you get a raise, up your contributions by the same amount and you'll never have to adjust your budget, suggests the Money Wizard, a 27-year-old blogger and financial analyst with more than $170,000 in the bank.
2. Spending on the wrong things.  If you're overspending, there's a chance your money is going to the wrong places. It is crucial to establish the difference between "wants" and "needs," Brad Sherman, president of Sherman Wealth Management, told Business Insider. Once you've accounted for all of your "needs" — such as housing, food, insurance, and student loan payments — and have set aside savings, then you can decide which "wants" to pursue. "If they don't fit into the budget, you're going to get into trouble later on," Sherman warns. How to improve: If you're trying to break the habit of overspending — or keep it from developing — try tracking your money or signing up for an app that will do it for you, like Mint. You'll be able recognize patterns in your spending and may decide to put that $20 a week you spend on lattes toward your next vacation instead.
3. Being unaware of your cash flow.  Cash flow is one of the most important things to be aware of, especially in your 20s, says Jonathan Meaney, a certified financial planner and wealth manager at Carter Financial: "You've got to know where your money is going and you've got to make sure that more money is not going out than is coming in." This means sitting down to craft a budget, but it doesn't have to be exhaustive. "A budget is simply a plan to make sure your money goes where you need it, instead of trickling away when you aren't paying attention," Sherman says. "And if you don't have one, that's likely what will happen." How to improve: Start with three budgeting strategies super rich people use — you'd be surprised at how simple they are to implement. Or check out one of the many free budgeting apps, like Pennies, to help you categorize and monitor your monthly and annual spending.
See the rest of the story at Business Insider
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