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7 Money Mistakes to Avoid in Your 20’S

You will only be in your 20's once, so make it count. Be wise by avoiding making financial mistakes and build a life that your future self will be proud of.

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You will only be in your 20's once, so make it count. Be wise by avoiding making financial mistakes and build a life that your future self will be proud of.

Photo credit: Drobotdean

Your 20’s can be a fun, exciting, and carefree time of your life. Life-changing events also start in this stage of your life, from building your career path to gaining skills to becoming financially independent. Eventually, it will all have a significant impact on your life. Mistakes tend to be made quite often during this time. Learning from your mistakes is what helps you grow. Some mistakes may seem harmless but others like finances can cost you a lot in the long run and are best to avoid.

A lot of responsibility is required in managing this kind of freedom. Failure to understand the value of time and money can cause you to make some costly decisions and hurt your financial future.  These are the 7 money mistakes to avoid in your 20’s.  



This could be caused by the pressure to impress your friends and relatives by doing things like moving into a big house or buying luxurious furniture. You want to live in the moment right? What could possibly go wrong? Having the “spend it when you can” attitude will strain you financially and bring you closer to debt than you think. Avoid living beyond your means. Prioritize what you need and consider a minimalist style of living. 


Budget free

When you get your first paycheck it feels rewarding - almost like you’re on top of the world, right? It’s easy to get stuck in that feeling and before you realize it you are living paycheck to paycheck simply because you don’t know how to manage your money. Living without a budget can lead to unnecessary overspending as stated in the first point. The importance of creating a budget is that it gives you control over your money and how to spend it. You become more aware of your financial habits and the small changes to make so you can save more. The sooner you learn to budget the better it will be for your finances. Remember to stick to the budget as well.   


No retirement plans

Planning for retirement in your 20’s can seem like it's years away which is why most people may completely put this off. Here is a secret on why you need to start planning for retirement early. By saving even as little as 5% of your income on a monthly basis in a savings account will make a huge difference when you retire. The earlier you start, the more compound interest you earn with time resulting in a healthy retirement fund. Keep in mind that even as you live in the present you need to plan ahead.   


Forgotten financial goals

There are two things that once spent can't be undone, time and money. When you are in the early stages of your adult life, time and money are on your side. Don't be distracted with thinking you have a lot of time and forget just how important financial goals are. The best way is to be very specific on what your financial goals are then formulate a realistic plan to achieve them.


Lack of investments

It is understandable why many people in their 20’s are either scared or just stay clear of the term investments. If you wish to increase your income then you need to take risks and not just any but strategic ones. Don’t wait to get kids or when you are much older. There are various investment plans you can choose from. Becoming a smart investor involves analyzing your income, long-term goals and your risk appetite.


Ignoring loans/ debts

Allowing the pending debts to linger will build up and make it even harder to sort out. Ignorance isn’t an excuse especially when it comes to your finances. List down all debts and prioritize those that are urgent first. You can settle them in installments. Paying on time will build a good credit score should you need a loan in the future. 


Absent emergency funds

The one thing that 2020 taught us is that the unexpected can happen at any time. As such in life, there are emergencies that can happen suddenly and your income isn’t as reliable to sort them out. A safety net is important to have at all times. Most people in their 20's still don't understand just how important an emergency saving fund is. Even in your 20’s you need to set aside 10 to 15% of your income to create a fund for a rainy day. The last thing you want is to be financially stranded in a desperate situation. The fund ought to cover at least three to six months of expenses. 



There are various stages of life we go through. Each one has a purpose. The actions you take early on have a great impact ahead. Rather than waiting till you are older to deal with finances, why not take charge now? You will only be in your 20's once, so make it count. Learn from your mistakes but also be wise by learning from other people's mistakes. Don't allow history to repeat itself. Avoiding the money mistakes mentioned above allows you to build a life that your future self will be proud of.

Let us know in the comment section what money mistakes you made and the lessons you learned.

Written by

Cindy Nyagah

Cindy Nyaga is a passionate writer with diverse skills and communications and media expertise. Her hobbies include; writing, volunteering and travelling.

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