Here are methods you should adopt to avoid too much debt in your 20s

Your 20’s would be a mix of many new changes. This includes graduating from college, pursuing higher studies, getting your first job, changing career, or even getting married. That said, these changes also demand you to take financial obligations in case you are paying your education loans, you are planning to get marry or thinking to buy a home on loans.

This is when you will also be receiving many calls from the banks, financial institutions offering you the best deal on personal loans, credit cards, or debit cards. Further, all of these lenders provide simple loan processing and thrilling credit card limit increases. Getting a loan has never been easier if you have a steady job, but this has also led to people taking out many more loans than they used to.

On the flip side, this trend has also led to debt traps if carried to the extreme. More so in your early years, when your money may be little, but your wants and needs are numerous. To avoid going overboard with your borrowing, keep the below ways in mind:

Take note of your spendings

We get into trouble when we start spending more than we can afford since we don’t know how much we’ve already borrowed. Analyse your bank and credit card statements carefully to see where your money is going. Do you have a lot of EMIs going on at the same time? Spending a lot of money on expensive phones or shoes is a bad habit. Saving begins when one is aware of the non-essential expenses that consume the majority of one’s income.

Stick to the motto of saving first, spending later

It’s far simpler to control your spending and prevent going into debt if you start your savings before spending any money. Make a list of your essential expenses, such as rent and electricity. Even if the sum saved is insignificant, it counts as progress.

Plan for the larger goals

When it comes to electronics, it’s especially difficult to resist the allure of a great deal on a new item. By default, you’ll use your credit card to pay and then set up an EMI plan. You’re likely to end up with many EMIs and little savings when sales occur about every two to three months, and more so during the festive period.

At the very least, you should plan to save something and not have more than two EMIs going at the same time. Just because you want to buy something that costs more than your credit card limit doesn’t mean you need a personal loan. Instant pleasure is good, but it’s detrimental to your financial health.

Avoid the minimum payment pitfall

And lastly, make sure you pay more than just the minimum amount owing on your credit card bills each month. Pay all of your bills on time and in full. Credit card EMI deals are common during shopping sales, but they aren’t always as enticing as they appear on credit card statements when it’s time to pay.

You should only take on debt if you know how to manage it well and afford it with the money you earn and have saved. The next time you’re scrolling through your shopping app, take a moment to consider whether you need to borrow money to buy something.