I generally look back at my early 20s with little regret. Sure, there were a few regrettable boys and more than a few embarrassing Facebook photos. But they’ve all led me to where I am today.
The main regrets that stick with me are financial. The money mistakes you make, no matter at what age, have a habit of sticking with you for years after.
Regret 1: Getting a second credit card
When I started writing about finance about four years ago I was hit in the face with product offers on a daily basis. I already had a credit card with my bank, which I was managing extremely well, but I just couldn’t resist adding to my Velocity Points balance.
Earning a few thousand Velocity Points on a rewards credit card could have been great – if I had just gotten rid of the other card. Two credit cards was too much for my entry level writer’s salary. Before long my credit card debt had gotten slightly out of hand.
Lesson learnt. Never take on more debt than you can comfortably repay, even if the banks are willing to give it to you.
Regret 2: Not being realistic about my debt
Having gotten back in control of my finances after the double credit card debacle, I was in the process of purchasing my sister’s car. I was applying for a personal loan to buy her vehicle and had the option of consolidating my credit card debt into the loan as well. This would have allowed me to repay my remaining credit card debt at a lower interest rate.
But I didn’t do it. Why? I was scared of applying for a personal loan of over $10,000, even though it was only slightly over. Having my debt in two separate accounts made it seem smaller and I obviously wasn’t ready to recognise how much I was about to owe, even though it would have saved me money in the long run.
Regret 3: Moving out of home too soon
I started looking at rental properties pretty soon after entering the workforce. A friend and I got approved for the first place we looked at and eagerly moved in. Did it give me the independence I so craved? Yes. But did it also put a dent in my savings that I’d worked so hard on up until that point? Yes.
If I’d stayed at home even for another year or two I would have saved myself thousands on rent and expenses. When I did finally move out I would have been in a much more secure financial position.
Regret 4: Not signing up for an overdraft sooner
I have completed an Undergraduate and a Master’s degree, and my prolonged student life means I am well-acquainted with student struggles.
One of these struggles was trying to reconcile inconsistent pay. As a diligent saver, I was constantly moving money into my savings account each time I was paid. While I left money in my transaction account for expenses, more often than not I was hit with a surprise Opal or toll fee directly debited from my account. This meant that my account would be overdrawn and I’d be charged $10, not to mention I’d put myself in a bad position if I ever needed to use my transaction history to apply for credit.
I eventually set up a personal overdraft with my bank, which charges a monthly fee and interest only when I use it. I hardly do use it anymore, but it’s a great safety net to have.
Regret 5: Not investing sooner
Now that you know of my struggles with credit cards, inconsistent pay and spending too much on rent and personal loans, you can maybe understand why I didn’t prioritise investing my money. But I wish I had.
The sooner you get into investing, the better. And by “investing” I don’t necessarily mean the more complicated investment options such as stocks and bonds. With the rise of fintech (financial technology), new companies are making it easier than ever to invest.
I personally use Acorns, a micro-investment app that rounds up your everyday transactions to the nearest dollar and invests this amount for you according to your risk appetite. Other options such as BrickX, where you can invest in real estate from $100, or peer-to-peer investing, where you earn a return by providing funds for other people who are looking for a loan, could also be considered.
These regrets are nowhere near as bad as they could be. I’ve never had bad credit or had to use all my savings in an emergency, for example. And one good thing about having these regrets? Each mistake has led to a learning curve that will put me in a better position later in life.
Elizabeth is personal loans editor at finder.com.au. She enjoys making and then writing about her financial mistakes so that you don’t have to.