7 Ways To Fix Poor Money Choices You Made Earlier in Life (2024)

When you are young, you may not realize the long-term effects of racking up substantial amounts of credit card debt. You also may not have had much of a choice as you struggled to make ends meet. But now, as you become more financially stable, you may want to make changes that can solve some of the money mistakes of the past.

Whether you never thought about saving for retirement, failed to build your credit or never thought about the importance of an emergency fund, now is the time to turn things around. There are several things that you can do today to remedy the problems that were created years ago. Here are seven ways to fix poor money choices you made earlier in life.

Get On a Budget

The first step to financial stability is creating a budget. In order to do this, you need to take account of what you make and spend each month. Most financial institutions offer apps that can help you track your spending. Once you have an idea of where your money is going, you can start to make cuts to unnecessary spending.

Setting up a budget can be hard if you have never had to before. According to CNBC, 58% of Americans surveyed said that they live paycheck to paycheck. Living within your means can be challenging, particularly if you are in an area with a high cost of living. You may need to consider options like relocating to a less expensive neighborhood or downsizing in order to save money.

Set Achievable Goals

Once you know where and how you are spending your money, you can start setting goals. If you have never established an emergency fund, that is a good first step. It is important to set both short- and long-term goals and to be sure that they are realistic. Setting goals that cannot be achieved with the income you have will only set you up for failure.

Increase Your Retirement Contributions

When you are 20, you may not have thought a lot about your retirement, but at 40, reality has likely started to set in. Retirement approaches quicker than most people think, and very few people are fully prepared for it.

As reported by CBS News, around half of adults (50% of women and 47% of men) “between the ages of 55 and 66 have no retirement savings.” The earlier you start saving for your golden years, the better. Increase your retirement contributions if you can, and always take advantage of employer-matching contributions.

Build Credit With Prepaid Cards

Another thing that few people think about in their youth is the importance of building credit. They believe that they have years to recover from not paying credit card bills on time or from not building credit at all. The fact of the matter is that in order to do things like buy a house or a car, you will need to have a credit history, and having a good credit score will help you receive more favorable lending terms.

You can build your credit score (or help it recover) by applying for prepaid credit cards. You can also have someone cosign for you on a loan to help you establish credit if you are unable to qualify for one on your own.

Open a Roth IRA or Other Investment Account

If you haven’t started investing, you may want to start now. Consider opening a Roth IRA or another investment account to set yourself up for retirement. The sooner you start, the better, but you can still make it worth your while even if you aren’t in your 20s anymore.

Pay Off Credit Card Debt

CBS News reports that Americans carry $986 billion in credit card debt. Even more staggering is that CNBC Make It reported that the average debt among individual cardholders with unpaid balances was $5,733. This means that millions of Americans carry thousands of dollars worth of credit card debt each month.

If you want to get back on track financially, you need to start by paying off some of this debt. There are several methods that have proven effective for paying off even large amounts of unsecured debt, including the snowball or avalanche method.

Rethink Retirement

The final way to fix financial problems created in your younger years is to rethink retirement. If you are inching toward retirement but know that you will not have enough money saved, you may want to work longer before calling it quits. You can also think about working part time or getting a side hustle to help you live the life you want as you get older.

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