4 Tips to Help You Avoid Too Much Debt in Your 20s


When you are young and recently employed, you would be flooded with offers to get loans and credit cards. It is natural to get tempted by these offers, but if you are not disciplined with your finances, it can prove to be a vicious trap.

For salaried people, getting credit products is very easy these days, and no matter how much you try to restrain yourself in today’s date, people do end up spending money they cannot afford.

The amount of credit purchases has been growing in recent years, and the amount of loans has been exceeding the number of cumulative accounts out there, which signifies that people are borrowing much more than ever before.

Needless to say, many people often end up falling into debt traps they find hard to come out of. While it is okay to use a credit card or taking a loan, the repayment should be calculated as per your income beforehand.

If your desires overwhelm you more often than it should, you would end up spending the next decade or so repairing your broken finance to be debt-free. Here are the few tips to keep in mind to not get into a debt trap.

4 Tips To Avoid Much Debt in 20s

4 Tips To Avoid Much Debt in 20s

1# Gain Clarity

The problem with finances starts to occur when you are not clearly aware of your income and expenses. Take time out to sit with your income and expense statements including your credit card records.

It would give you a peek into unnecessary expenses that you might be doing that might be hurting your income beyond repair. Once you know you are not in a position to spend unnecessarily anymore, it would become easier to restrict yourself from spending impulsively next time.

Clear few of the installments running on loans and credit card and make it a priority. Getting clarity about where your finances are heading would make it easier to focus on savings rather than spending.

2# Focus on Savings

Save first and spend later and make it a habit. There are options available these days like SIP and recurring deposits or mutual funds investments that would make it easier to save and invest.

There are many mutual funds like UTI mutual fund in which you can invest to get considerably high returns than in traditional investment tools.

When you sign-up for these automatic investments, the money is deducted from your account automatically. It helps with controlling your spending habits and keeps your impulsive splurging temptations in check.

Do not worry even if you are saving less because the key is to start. Once you see how fast your savings can grow and become a lump sum in a couple of years, it would automatically generate interest in you.

3# Plan in Advance for Big Expenses

During the 20s, especially in the age of information and online shopping, it can be hard to resist temptations completely. There are sales going on round the clock. So, if you really want something that you have been eyeing for long and it is considerably expensive, plan for it in advance.

Put aside some amount each month to ensure that you can pay it in full and even if you pay from a credit card; you are able to clear any other EMI that’s already in progress. Try to avoid multiple simultaneous EMIs to keep your finances healthy.

4# Pay More than the Minimum Amount

Most people just pay the minimum due amount on their credit cards. Avoid it and try to pay the bill on time.

If you don’t, you are going to pay a high interest rate that will push the cost of whatever you purchased using it higher. When you go shopping, you will find many stores offering deals when you use credit card. However, do not fall into the trap and avoid using credit card wherever unnecessary.

Make sure that you are always aware of your debt and how you plan to approach it. If you do not have a plan in place, your debt will get out of hand quite quickly, and you will find it harder to get back on track financially. So, use the above tips and keep out of debt as long as your income and savings allow you to.

Author: Cathy Carter