For better or worse, we often feel embarrassed about the money mistakes we make, especially when those mistakes involve loans. After all, your ability to borrow money is often tied to how you are perceived by lenders and, by extension, society as a whole. However, these mistakes are often just a natural part of learning how to handle one’s finances.
In your 20s, you’re still navigating first jobs and the emergence of sudden responsibilities. And given that our first jobs often don’t always pay as much as we’d hoped, we should all expect to make a few missteps along the way. What matters is that you recognize the common pitfalls early so they don’t follow you into your 30s and beyond.
One of the first things to learn is which credit tools can help you stay in control. With Maya Easy Credit and Maya Personal Loan, Maya’s popular consumer credit and loan products, you enjoy fast, accessible options for both small budget gaps and larger planned purchases. Maya Easy Credit is a virtual credit line that provides up to PHP 30,000, payable in 30 days with a small service fee of as low as 3.99% and zero interest), while Maya Personal Loan lets you borrow up to PHP 250,000, with installment terms of 6, 9, 12, 18, or 24 months and add-on rates starting at just 0.77% per month.
Having the right tools is just the first step. Once you understand the common errors that your peers make, you can avoid financial missteps in your 20s and later in life. Here are the most common mistakes to watch out for.
1. Borrowing Without a Clear Plan
Any debt you take on must have a purpose, preferably for managing cash flow timing issues or funding a major need. All loans are commitments, and this is even more true for something like a trusted bank loan product. Your trustworthiness is effectively being put to the test, and you don’t want to be putting yourself in that situation unless you understand the loan and have a definite plan in place.
Before you commit, ask yourself: What exactly is this loan for, and is this the best tool for the job? With Maya, you can be sure you have the options you need. Smaller, short-term expenses may be better handled with a virtual credit line like Maya Easy Credit, while bigger needs can be handled through structured installments via Maya Personal Loan.
2. Using Short-Term Credit for Long-Term Expenses
Failing to plan often results in a reliance on short-term credit for large expenses. Something like a laptop upgrade, medical procedure, or expensive appliance replacement is better suited to a loan product like Maya Personal Loan, which spreads payments over several months. Reserve credit lines like Maya Easy Credit for short-term cash flow gaps, like those involving groceries or utility bills that need to be covered during a tight month. This way, your loan repayment timelines are easier to manage.
3. Not Understanding the True Cost of Borrowing
Interest, service fees, and repayment schedules can easily confuse first-time borrowers, causing them to pay far more than they initially anticipated. You should do your due diligence before you borrow, but it’s also a good idea to choose a lender that communicates its terms clearly, like Maya Bank. With Maya Easy Credit, for instance, the structure is simple: no interest, just a service fee. On the other hand, with Maya Personal Loan, you have a clear monthly add-on rate.
Before you take out a loan, calculate the total cost and talk to one of the lender’s representatives, if necessary. Knowing the full repayment amount helps you prioritize which expenses are worth financing and which ones can wait.
4. Not Preparing Cash Savings for Emergencies
Not saving enough is a common mistake in your 20s. Unfortunately, sudden health expenses, major car and home repairs, or family needs can emerge at any age. Yes, it’s helpful if you can access a safe instant loan during emergencies, but it’s still a good idea to have enough hard cash saved up to soften the blow of these situations.
Start by choosing a savings product like Maya Savings. Maya Savings offers a base interest rate of 3.5% interest p.a. that can be boosted up to 15% interest p.a. on your first PHP 100,000 deposit balance, simply by completing everyday transactions like buying prepaid load, paying bills, using Maya Easy Credit, or using Maya to pay online. This high-yield savings account helps preserve the value of your emergency fund against inflation and ensures you don’t always need a loan to address every single hiccup in your financial journey.
5. Maxing Out Your Credit Limits
Getting an increase on your credit limit feels good, but it’s not a license to spend more. Maxing out your available credit, even on otherwise excellent credit and loan options, removes any flexibility you might need later and increases your repayment burden immediately. Going back to the first point, you want to borrow only what’s necessary for your goals. Leaving some unused credit is also a good idea as it gives a safety cushion, should your emergency funds be lacking.
6. Thinking Debt Is Always a Bad Thing
The last mistake is going in the opposite direction and avoiding loans at all costs. Yes, it’s good to have a sizable cash buffer, but you should also consider the long-term benefits of lending, especially for goals you may want later in life, like property ownership or starting a business. Making a point to take out a few, well-planned loans on a regular basis can help boost your creditworthiness, helping you hit those big-picture goals more comfortably once you exit your 20s.
Level Up Your Money Mindset and Financial Tools Today
Your 20s are a good time to develop the right attitudes towards debts and other money matters. It’s also the best time to start exploring the financial options that will make the biggest positive impact on your life. If you want the best loans for both everyday needs and bigger life upgrades in your formative years, explore Maya’s credit and loan products today and borrow smarter from here on out.
