Saving properly, avoiding bad debt, and surrounding yourself with the right people are key for a bright financial future.

Many people in their twenties feel like they still have the entire world ahead of them- so they put off making smart financial choices until later in life. While that’s true that twenty-somethings have a lot more of their lives to go, the financial decisions you make in your twenties will either haunt you or help you in the 30s, 40s, 50s, 60s, and beyond. Therefore, you should be sure that you’re making the right choices during this vital but often ignored decade.

In this article, we’ve laid out four of the biggest financial mistakes you can make. Avoid these, and you’ll have a much better chance of sailing into your thirties with a strong financial foundation, and without bad debt, stress, or other negative emotions that accompany serious financial mistakes.

Not properly preparing for retirement

Retirement is getting more expensive every year– and with forms of retirement assistance like pensions, social security, and other government benefits looking slimmer every year, the burden of retirement is shifting more toward individual savers and investors. For many individuals, retiring with absolute certainty that their quality of life can be maintained for 20-30+ years requires substantial funds, so getting an early start on retirement saving is absolutely essential.

Due to the power of compound interest, individuals who start saving at 25 often have 50% percent more savings by the time they retire when compared with people who start saving at 35, just ten years later. This means that every year you wait to save past the age of 25 when most experts recommend to begin saving, is a potential loss of tens, if not hundreds, of thousands of dollars depending on factors like your retirement age and the size of your portfolio.

It’s also a mistake to fail to take advantage of tax-sheltered retirement vehicles like employer 401(k)s and Roth IRAs. These can allow you to defer taxes on a significant amount of your retirement savings until you’re ready to retire. While there’s an annual contribution limit for both, there’s no limit to how much the money in the account can grow to– so start contributing money now, and you could have hundreds of thousands by the time you retire.

Getting deep into credit card debt or loans for unnecessary items

Nice cars and fancy furniture might seem fun in your twenties, but unless you have wealthy parents or a trust fund, it’s usually not worth it to indulge in expensive material possessions you can’t pay for in cash. Excessive and/or unpaid credit card debt can be especially destructive in your twenties. Not only does it often prevent young people from saving, it can also damage your credit score, making it more difficult for you to eventually take out mortgages, business loans, and student loans and potentially raising your credit card fees and insurance rates.

Surrounding yourself with people who have bad money habits

The saying “you are the average of the five people you see the most” has never been more true when it comes to money and financial habits. So, if you have friends or family members who are constantly asking you for loans and always seem to have trouble paying their bills, you might want to keep your distance, at least until you develop solid financial habits yourself and aren’t tempted to give out loans that may not be repaid.

In addition, it can be costly to date other people with bad money habits. While having a cash-strapped significant other might be cute in high school or college, having a partner with serious money problems as an adult can drag you down. That doesn’t mean you need to only date the wealthy, just avoid dating someone who isn’t making a genuine effort to improve their financial situation to secure a better future– for both of you.

Failing to get the right insurance to protect yourself and your family

While you might think insurance is just something for old-timers, there are a lot of ways it can help protect you– even in your early twenties. While it might sound intense to consider at such an early age, life insurance may be a good idea if you have student loans or other debts that have been co-signed by your parents, significant other, or other relatives. If something happens to you, cosigners will often be responsible for paying the remainder of your loans– and that’s the last thing you want to happen to the people you care about.

Another type of insurance that can often help is property insurance. While people in their early 20s aren’t known for having high net worth, they still often have several valuable items, such as laptops, TVs, smartphones, tech items, and jewelry. These items can be financially difficult to replace in the case of home or apartment break-ins, natural disasters, or serious accidents. Having a little help in these scenarios can seriously benefit cash-strapped young people, especially if the accident or disaster has also resulted in injuries or other medical complications.

Finally, twentysomethings may want to consider disability insurance. Despite the importance of savings and investing, a young person’s most valuable asset is their ability to earn money– and it’s important to have a source of income if that ability is seriously impacted for a long period of time.

When it comes to making financial decisions in your twenties, think about the future impact of your choices

Every decision a young person makes in their twenties has a ripple effect into their thirties, to fifties and even seventies. So, think about your future self at forty-five; if they could go back to twenty-five, what would they do differently? Avoid financial regret– make good choices now so you can enjoy your life as a financially secure adult.

To learn more about good financial habits for people of all ages— and how insurance may be able to protect you and your family’s financial future, contact Avante Insurance today for a free consultation.