Financial mistakes I made in my early 20s
Most of us have made some or other financial mistakes in their early 20s of their life. The reason I call them mistakes is that I feel guilty for not doing it at the right time. I hope someone might not make the same or at least know why I call them mistakes.
Avoiding credit cards
I avoided credit cards when I was a master student in Germany because I thought I might spend on things that cost more than my monthly budget. I always preferred to pay money with my Giro konto that means a current bank account in Germany. The benefit of having a credit card is that it increases your credit score if you pay back your monthly bills on time. The credit score is what decided by banks whether to give you a personal loan with lower interest rates or even provide you with an overdraft in your account. You might be confused why I call it a mistake, this is linked to my next mistake.
Not negotiating for low-interest rates
I always believed that buying agricultural land helps since in the end, even if the world crashes you can still cultivate food in it and live. If you invest early you get it at a lower price and retain more returns out of it, but that's not the only thing, you also need to be patient and wait for the right time to invest.
After finishing my Master studies I started working in a small startup company in Germany. After taking a paycheck for 3 months from my company I approached the bank for a personal loan to buy a piece of agricultural land back home in India. The bank personnel quickly checked my credit score and taking into consideration that I have a job, they offered me a loan with a 6.5% interest rate. My interest rate would have been much lower if I had a good credit score and if I had negotiated for a better interest rate.
Failing to automate my money
I always had one account that is my current bank account, this gave me a feeling that I have good savings and constantly spend money on things that I don't need. For example, I didn't need to spend 600 dollars on a wedding suit which I used once in my life.
Automating your money flow to your investment accounts and savings accounts every month will leave you less money in your current account and thus allowing you to only spend on the things that you love. I opened multiple accounts one for investment and the other for a savings account — (tagesgeld, festgeld account in Germany). The savings accounts pay me interest up to 0.20% p.a for the money I save and I can also withdraw money from my savings account to my current account in case of emergency.
By automating my money flow I slowly built my wealth without my involvement and I spent very less time worrying about my financial insecurities since I have now up to three months of my net income in my savings accounts.