Home' Trinidad and Tobago Guardian : September 14th 2014 Contents SEPTEMBER 14 • 2014www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
PERSONAL FINANCE | SBG21
in your 20s,
it can be
keep one eye
already feels out of your control. More than
40 per cent of young adults today are con-
sidered underemployed, working in jobs that
hardly require a college degree. Expenses like
housing, transportation and health care are
only getting more expensive. More than one-
third of 18-to-31-year-olds still live at home.
But the good news is that a few key decisions
you make in your 20s --- from what you study
and how much you save to what kind of car
you drive and where you live --- can drastically
improve your chances of coming out on top
later in life.
Here are common money mistakes you
should avoid at all costs:
1 . Choosing the wrong university and course
College is still the best possible investment
you could make in your earning potential. But
it won't come cheap. If you're about to pump
that much capital into your education, make
sure your future career will pay enough to
make it worth your while.
A recent report by the Federal Reserve Bank
of New York found that engineering and math
majors can expect to get the highest return
on their college investment (21 per cent and
18 per cent, respectively), compared to much
lower-earning liberal arts (12 per cent) and
education majors (9 per cent).
That doesn't mean you should abandon
your dreams of repairing our nation's broken
public education system or winning a Tony.
When choosing your major, consider your
talents and interests as well as which types
of careers are growing in today's job market.
If you're undecided, don't rush into a costly
four-year programme. Enroll at a community
college, which will give you time to consider
your options and enjoy much lower tuition at
the same time. If you're determined to attend
a foreign university, research the school's finan-
cial aid packages to figure out how much you
can expect to pay.
2. Being too shy to negotiate your salary.
If you don't negotiate your salary throughout
your career, you might as well put $500,000
in a trash can and light it on fire. That's about
how much workers can expect to lose in life-
time earnings if they don't play hardball at
the negotiating table, according to Salary.com.
When you're straight out of university apply-
ing for entry-level positions, there may be
fewer opportunities to negotiate. It can never
hurt to ask a hiring manager if your salary is
negotiable. The worst thing they can do is say
no if the position's salary is predetermined.
If you are given the chance to negotiate, make
sure you have an idea of what your position
typically pays before tossing out an arbitrary
3.Using and abusing credit cards.
Youth and impulsive behaviour go hand in
hand. Throw a credit card into the mix and
you've got the makings of a future financial
disaster. People in their 20s have the lowest
credit scores of any age groupand are in more
debt, according to credit reporting bureau
Running up high credit balances, missing
payments and frequently opening new lines
of credit can destroy your credit score. And
a low credit score can limit your access to
loans when you need it most, lead to higher
interest rates on things like auto and home
loans, and even give future employers reason
to doubt you as a job candidate.
Of course, you can avoid credit debt by
ditching credit cards altogether---a strategy
used by 63 per cent of millennials---but you
may miss out on a chance to build your credit
while you're young.
If you're wary of opening your own credit
card, consider becoming an authorised user
on your parent's credit card or taking out a
secured line of credit from a local bank.
4. Mistaking youth for invincibility.
According to a July study by the Common-
wealth Fund, nearly 20 per cent of 19-to-34-
year-olds were uninsured in 2013. Going with-
out health coverage is financially risky: The
uninsured pay for more than one-third of their
healthcare out-of-pocket, according to the
Kaiser Family Foundation. If your employer
offers health coverage, take the time to research
the different plans available and don't be shy
about asking questions. Choosing the cheapest
plan can seem financially savvy, but you may
get hit with a prohibitively high rates.
5. Not investing in renter's insurance.
One of the simplest things you can do to
protect your finances in your 20s is to take
out a cheap insurance policy. Your landlord
may have an insurance policy for the building,
but that won't include your belongings should
anything valuable gets stolen or damaged.
Insurance will replace your belongings in the
event of a fire, flood, burglary, or some types
of damage. Not all policies are created equal,
so choose carefully. Start by taking a quick
inventory of your belongings and adding up
their value, then compare estimates from sev-
eral different insurers to see what their policies
will cost you.
6. Moving to a place you can't afford.
We get it. What could be a more anticli-
mactic way to kickstart your career than by
hopping in your car after graduation and park-
ing it in your parents' driveway?
But hear us out. If financial security is on
your list of priorities, taking your entry-level
job skills, do yourself a solid and take the time
to save at least a few months' worth of living
expenses first by living rent-free at Chez Mom
and Dad for a few months or even---gasp---a
At the rate healthcare and housing costs are
rising, you're going to need much more cash
when you retire than your parents or grand-
parents ever had to worry about. The good
news is that you have one of the greatest assets
of all on your side---time. Thanks to the power
of compounding interest, the money you save
in your 20s is potentially worth way more
than anything you will set aside in your 30s
Start small. If your employer offers a pen-
sion, sign up for it and contribute at least 6.0
per cent of your paycheck. Increase your con-
tribution by another percentage point every
year. Maybe you'll wind up saving millions
and maybe you won't--- but chances are you'll
be far better off than had you done nothing
to avoid in
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