10 Financial Mistakes to Avoid in Your 20s

A group of young adults


People in their 20s are at a unique point in their lives. They are at an age where other people already expect many things from them, yet they’re still trying to shed the immaturity that comes with being a teenager. Financially, other people also hope that they have it all figured out. There is still bound to be some unwise allocation of funds here and there. That’s why it is essential to talk about the financial mistakes to avoid in your 20s.

Having a job for the first time gives people in their 20s a lot of freedom. But freedom can sometimes lead to bad decisions that will have dire consequences later on in life. While it’s fun to eat, drink, and be merry, it’s much better to save and reap the rewards later.

Join us as we discuss the ten financial mistakes to avoid in your 20s. Let us be your guide as you navigate this pitfall-filled experience to come out unscathed and ready for the more significant challenges ahead.

Avoid These 10 Financial Mistakes to Ensure a Worry-Free Future

1. Going Out Too Often

Young ladies in a party bus


While hanging out with your friends makes for priceless memories, it can also make for empty wallets. Going out requires money, be it partying, eating, or going to the movies. No matter how affordable you might think your adventures might be, too much of those things will deplete your funds quicker than you can say “YOLO.”

We’re not saying that you should cut this out of your life entirely; we’re just saying that everything in life is better when done in moderation. The results of the things you are doing today won’t immediately become apparent, but once you reach the point that it already is, you’ll be thanking yourself if you saved up some money.

While it’s correct that you should enjoy your youth, you’ll be spending a lot of time being a full-grown adult. The best thing is to prepare for it so that it won’t take you by surprise in the end.

2. Credit Card Reliance

Different credit cards


Credit cards are good because they allow you to purchase different things even if you don’t have that much cash with you. But credit cards can also prove to be a massive problem if you don’t know how to use them properly. While it’s fun to have the ability to buy anything at any time, the bills plus their interest might catch you off guard.

A good idea to live by when it comes to money is if you can’t afford it by cash, don’t buy it at all. It seems a little harsh, but that will allow you to live a debt-free life. Would you rather spend a considerable chunk of your adult life paying debts or enjoy one that is carefree by living by your means?

Credit cards should be allocated for emergencies or buying what you truly need, not the ones you just want. Make the right decisions, and don’t bury yourself in debt.

3. No Gadget-Buying Discipline

iPhone 12


Different gadgets have become a necessity these days because of their comfort. That doesn’t mean that you have to have the latest model of phones or other gadgets to belong.

Being in your 20s, you should already know the difference between what you need and what you just want. Having a phone or a laptop is necessary, but having the latest phone model and your laptop is just a want.

4. Zero Cooking Skills

A woman cooking


Cooking is one of the most fundamental skills we should learn to survive. Cooking is also an excellent skill to have when you’re looking to save a lot of money. Not knowing how to cook is tantamount to throwing your money away since the money you could have spent on ingredients would go to things other than your food when you eat in restaurants.

With home-cooked meals, you can stretch it out to two to three days, depending on the amount of food you’ve cooked and how many people will eat. Compare that to eating outside, where every meal will cost you varying amounts of money, and it’s bound to place a dent in your wallet.

5. Zero Financial Goals

A picture representing financial goals


Goal setting is essential not just in terms of money but also in life. While it’s fine being aimless in your 20s, setting financial goals will separate you from the pack by giving you direction. Without goals, you will be just like driftwood, just going where the current takes you.

Having reasonable financial goals means a clear endpoint for your money. It means that your money isn’t just there waiting to be spent; it’s waiting to be spent for something important. You should always ask yourself where you want to be in life after a set number of years because where you want to be in life directly ties in with how much money you’re going to allot to it.

If somehow you’re spending a lot of money on things that won’t get you to where you want to be, then that’s exactly the thing you want to cut off from your life. It’s better to avoid this financial mistake early on so that you can save a lot of money for your future.

6. Disregarding the Stock Market

Stock market trend


Investing in stocks is one of the excellent ways to earn passive income. Some companies pay dividends to their stockholders, eliminating the need for you to monitor the stock market constantly. It also allows you to hold your stock for extended periods, or even forever, as long as it pays dividends.

One of the common financial mistakes people in their 20s make is not investing in stocks. They feel that what they earn from their jobs is enough to sustain them, not fully considering economic inflation.

Some are afraid to get into it because they haven’t the faintest idea of how it works. It just requires a bit of research, and if you want, you can also consult with an expert on the matter to get you started. If you want to secure your future, consider investing in stocks and sit back as the money rolls by.

7. No Emergency Funds

An example of things your emergency fund covers


An emergency fund is one that you set aside for unforeseen events such as sickness, job loss, or various repairs. Think of it as money that you shouldn’t touch, except for matters that require urgent action.

It is a huge financial mistake for people in their 20s not to set aside money for their emergency fund. Being young, they think they’re still invulnerable. But once they find themselves in a situation where they need urgent funds, they have nothing to use because it was already spent on other things.

Don’t fall into the trap of youth and a stable job; save something for the future or emergencies. Unforeseen events are called that for a reason; we can’t predict them. We can prepare for these things by setting aside a small portion of our income.

8. Moving Out Too Early

A couple moving out


Moving out is the ultimate dream of anyone in their 20s. This move affords them the freedom to do anything they want without being constantly reprimanded. But this decision also entails a lot of financial burden on their part, and those unprepared might be shocked about the challenges they will face.

Much like everything in life, moving out requires careful planning. If you are just doing it to escape the prying eyes of your parents, you might be surprised about the added expenses that come along with renting your place or buying a home.

The 20-29 age range is still pretty young; you shouldn’t rush into things since there’s plenty of time. Allow yourself to build sizeable savings before diving into something that might require a lot of money.

9. No Plans Increasing Your Financial IQ

Financial IQ


Financial IQ is a term coined by Robert Kiyosaki, a well-known expert in finance and business. Financial IQ refers to your overall knowledge regarding money. Robert Kiyosaki stresses the importance of knowing about money to manage it better and secure a carefree future for you and your loved ones.

One of the common mistakes people in their 20s make is not to learn all about money and everything that makes it work. Being young, you may only think about spending it and what to spend it on. This mindset can have dire consequences later on in life if left unchecked.

Spend time reading more about money and how to optimize your income. Allot some time to educate yourself about different methods you can apply to make your money work for you. Life isn’t all about “now,” it’s also about reaping the rewards later on.

10. No Retirement Preparation

A retirement sign


Retirement is the final stage of your life, there’s no more work, and you just have to enjoy the company of your family. Whether your retirement will pan out well or not is up to you. What you do in your 20s will significantly impact the quality of your life after retiring.

You might be thinking that it’s still too early to save in your 20s, but saving early in life will also affect how early you can retire. Do you want to be in your 60s and still working because your pension can’t support the day-to-day expenses, or do you want to be in your 50s just enjoying your early retirement?

The difference between retirees enjoying themselves and those who aren’t is what they did or didn’t do during their working days. Do the right thing and secure your future by allocating money to your retirement.


Youth is all about fun and making lasting memories. But life isn’t always sunshine and rainbows, and you can’t focus all the time on the fun. Avoiding these financial mistakes will make a massive impact on your future and how you get to enjoy your life when you’re older.

We hope that we stressed the importance of avoiding these financial pitfalls in your 20s through this article and that your future will be as comfortable as possible by following these tips. Remember that you are in control of your future, and everything you do will shape it from this point on.

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