Adulting is an exciting phase of life and you get the first taste of it when you are in your 20s. This is the time when you experience a lot of “firsts”. First job, first car, first time living on your own. The list goes on.

However, this is also the time when you may make the most careless mistakes, especially financial ones. Your personal skills to handle finance are heavily tested and if you are not careful, the mistakes you make now may stay with you throughout your entire adulthood.

As a matter of fact, many Cambodians are going through some form of financial trouble. According to a report by Bloomberg, 15% of Cambodians currently hold outstanding debt! Furthermore, the total amount of this debt stood at a great $8 billion as of 2019. To make sure your money is always well managed, avoid making these 5 personal mistakes in your 20’s.

Mistake 1: Not Making A Budget

The best way to keep track of your income and expenses is to make a budget. You can do this manually, on a Google or Excel sheet, or even a financial management app. The absence of a budget often makes you overspend, so having a handy guide to help you track where you plan to spend (or save) your money can do a world of good.

Try categorising your spending while creating your budget. This way you’re able to track where you spend the most money. Keep a separate fund for emergencies, health insurance, and savings. It’s also best to have at least 3-6 months of your average monthly expense in your bank at all times to keep yourself afloat on rainy days when you are out of job or in between big life changes.

Mistake 2: Settling The Wrong Debt First

If you find yourself with multiple loan obligations, prioritize settling the loan which has the highest interest rate first. Such loans most commonly include personal loans, credit card debt, and automobile loans. You can prioritize the loans with the lowest interest rate later as this will make a smaller impact on your financial situation, compared to those with high interest rates.

Prioritizing your loan obligations will also help you to incur less financing costs and give you a better overview of your financial standing as you plan for the upcoming years. However, it is still important to repay your loans on time.

Mistake 3: Piling Up On Student Loans

A student loan is probably the very first loan you will incur in your life, and it should be managed smartly to avoid it becoming a strain on your finances. The burden of this loan may begin in your teenage years and, if you do not pay on time, will pile up during adulthood leading to a poor credit score on your record. This may cause complications if you want to take other loans in the future, such as on a house or a car.

So steer clear of deferring or extending your student loan. Aim to clear the loan before you start a family or buy a new house. Disposing of this debt will allow you to make a fresh start when you move to the next phase of your life.

Mistake 4: Accumulating Credit Card Debt

Credit cards are a great financial tool and an excellent way to build your credit history, but only if you pay your debts in a timely fashion. Default on your payments or pay only the minimum balance to settle the bills, and the interest can compound to a large figure in the future. So make use of your card cautiously and avoid accumulating credit card interest by all means.

Mistake 5: Indulging Too Much In Online Shopping

We are all getting more accustomed to internet usage with each passing day. In fact, data shows that internet usage in Cambodia increased by 56% during the period of just one year from January 2018 to January 2019. Today, it is not unusual to shop for groceries, clothes, shoes and your everyday items online.

However, let’s face it – we can get so easily get carried away with online shopping with all those great looking products and ads we see, so make sure to follow some rules while also enjoying browsing. To avoid overspending, simply set an online spending budget. And, when you reach that limit for the month, list the item for the next month or discard the item altogether. A little discipline does go a long way!

The future is bright and full of promise, so give yourself every chance to live it to the maximum by managing your personal finances smartly. For more personal finance tips and tricks, simply visit our blog homepage!