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9 Money Mistakes You Should Avoid in Your 20’s

9 Money Mistakes You Should Avoid in Your 20’s

How often do you look back and think, “Wow, I wish somebody would’ve told me that a little earlier.”

Chances are, knowing what you know now, in hindsight, would’ve reduced a lot of heartache and stress. That being said, going through challenges can always lead to new personal growth. Right?

Personal financial challenges are not something you want to be going through in order to ‘grow’ though. Unfortunately the stats aren’t in your favour, according to the Retirement Income Literacy Survey, financial literacy isn’t just a problem for people new to personal finance. Quite frankly, it’s a little scary because not understanding the risks and pitfalls of personal finance can lead to financial disaster.

There is hope though! A lot of these potential financial regrets and money mistakes can be avoided by being aware of them in the first place. Want to avoid some of those nightmare money mistakes that you could make in your 20’s? Read on below.

Not saving enough money

The last thing you want to do is work through your 20’s and come out with nothing to show for it. Spending all of your hard earned dollars on junk possessions and partying will take its toll on your bank account. According to the 2015 Millennial Money Survey, 38% of under 20’s were saving less than 5% of their income. That means that 95% of it is being spent! As a good rule of thumb, you should be aiming to spend a third, save a third and invest the rest.

Buying stuff instead of experiences

I get, we all want to have flashy lives and have expensive stuff. But is it really making you happy? This one isn’t exactly common financial advice but maybe it’s a little more from the heart. I strongly believe in buying experiences rather than stuff. If you’re not buying experiences, buy assets. If it’s too late and you’ve already bought heaps of junk, SELL IT. Declutter your life. It’s therapeutic. J Money over at Budgets Are Sexy has been pawning his excess stuff on Craigslist for a while now and you know what? He’s been stacking up all that excess cash to build his wealth.

Picking a college major without thinking about prospects

College is an expensive adventure. The latest stats from College Data estimate that one year at a public college will set you back $23,410 or $46,272 for a year at private college. Assuming you take a four-year degree that’s some serious money you’re sinking into your education. Whilst it’s important to study something that you enjoy, picking something that has some decent job prospects afterwards is going to make that investment a lot more worthwhile. Picking a subject with a high graduate unemployment rate can make getting a job in your field difficult once you’re done. Set yourself up for success by picking a degree with decent job prospects.

Not having an emergency fund

Having some money stashed away for when you’re going through one of life’s little troughs could save you a lot of headache and heartache. Data from the 2014 Bankrate Financial Security Index Survey suggests that around 26% of Americans don’t have emergency savings. Whilst you can do everything in your power to stave off any sticky financial situations, you never truly know when something could happen. Unexpected medical bills are the most common reason for people declaring bankruptcy in the US. Having an emergency stash can help lessen the impacts of this and other types of financial disaster.

Not learning how to invest

Saving is not the same as investing. Putting away some time upfront to learn to invest could, funnily enough, be one of the best investments you ever make. There’s a whole bunch of sites where you can learn to invest, eTrade’s education centre is always a good place to start. You can avoid so many of the mistakes you’re likely to make investing by educating yourself and getting in early. Jesse Livermore one of the world’s greatest stock pickers started trading at the tender age of 15. At that age, he had already made $1,000; worth $23,000 in today’s terms. Get in early, learn the game.

Ruining your credit score

If you have debt, pay it on time and pay it off. Having a bad credit score can make your life a whole lot harder especially when the time comes to apply for a loan. Not only that, having a bad credit score can make it harder to rent an apartment or obtain a phone contract. The easiest way to avoid having a bad credit score is to avoid using debt unless you’re using it to buy assets or to pay it on time if you really must use it.

Spending all your money on a big liability

This is almost a little follow on from screwing up your credit score. Spending all your hard earned money on a big liability is a bad move. The best example of this I can give is buying a luxury car. You save up for a car and you finally buy it. Say you pay $40,000 for the car. As soon as you take ownership of it and drive it off the lot it loses around a third to half of its value. So already by buying the car you’ve lost roughly $13,000 to $20,000. Buying a big liability is a pretty quick way to blow your hard earned savings.

Working in the wrong job

Working at the wrong job can be bad for your health but also bad for your wallet. I’m not talking about working at a job that pays less than the others. I’m talking about working in a job you don’t enjoy. Whilst you can work in a high paying job for a short amount of time, in the long run, if you don’t enjoy it, you won’t last. Using a particular job, as a stepping-stone is fine, just remember what your original target was and make sure you stick to it. You would rather be at the bottom of the right ladder than at the top of the wrong one.

Not spending time to develop financial literacy

Financial literacy is a skill that is ridiculously valuable. Understanding basic personal finance and how money works can make your life a lot easier in the long run. However, it seems to be a problem all around. Even though financial literacy might not be a subject taught in schools, you should be making an effort to learn it yourself.

As I was writing this, I found some other money regrets that people had encountered in life. Two of my favourites were “Not buying bitcoins when they were $15 a piece” and “Putting all of my money into Dell stocks instead of Apple”. I hope these money mistakes get you kick-started on your way to financial success. If nothing else, you’re now pretty well versed on some of the big mistakes you should be aiming to avoid.

What’s your biggest financial regret?

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About Nick

Hey I'm Nick!

Hey there, welcome to I'm Nick the chief blogger here. I'm a college educated, personal finance loving, semi qualified accountant and don't mind a little side hustling here and there. To get more tips on personal finance, sign up to our mailing list above. You won't regret it!


All content provided on is for informational purposes only. Any content here represents my thoughts alone and not those of my employer. When making any financial decisions please seek out a out the services of a professional for advice.