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No matter what season of life you're in, it's a constant learning experience. During my 20s, I learned a lot -- by making plenty of errors. At that point in my life, I had some general knowledge regarding financial matters, but I didn't always make the best financial choices. Learn from my savings mistakes, so you can take steps to avoid them.
1. Saving the bare minimum
I've always been a saver. Luckily, I established this habit early in my life. In my 20s, I saved some of my income for emergencies. However, I didn't save as much as I could have -- so I wasn't always financially prepared when the unexpected happened.
My income was lower at this stage of my life, so my savings potential was limited, but I wish I had cut out some of my unnecessary expenses and made saving more of a priority. I've never been a big shopper, but I could have spent less money dining and going out with friends and put more into savings.
If you're still in your 20s, have fun and spend money on yourself -- but don't have so much fun that you neglect your savings goals.
2. Not automating my savings contributions
While I saved some money in my 20s, I didn't do so regularly.
If I had automated my savings, I would have been more consistent. If I had committed to saving a small amount of money each week through automatic transfers, I likely would have saved more.
In my 30s, automatic savings are a must. I feel less stressed knowing that my savings are a priority. By automating the process, I never forget to save or make excuses, and it's fun watching my savings account balance grow consistently.
3. Keeping too much money in my checking account
Another mistake I made was keeping too much money in my checking account. I was never the girl with only $2.75 left in her account the day before payday -- even when money was tight.
I felt safer keeping more money than necessary in my checking account. But I missed out on the opportunity to earn more interest by transferring some of that extra money to my savings account.
It's a good idea to keep some extra money in your checking account as a buffer -- but don't get into the habit of stockpiling all of your savings there.
4. Not paying attention to APY
In my early 20s, I understood the importance of having a separate savings account, but I didn't pay much attention to the annual percentage yield (APY) offered. I opened an account at my local bank because it was simple, and I kept that account for several years.
Luckily, I paid more attention to APYs and opened a different savings account in my late 20s. If I had done so sooner, I would have earned more interest from my savings contributions and had an even bigger emergency fund available.
Pay attention to the APY as you compare bank and account options. High-yield savings accounts can help you maximize the interest that you earn.
We all make mistakes -- it's part of being human. But by learning from others' mistakes (like mine), you can set yourself up for better financial success.
Check out our personal finance resources if you're looking for tips to make the best money moves.
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