10 Dumb Things Most People Do With Their Money in Their 20s


For most people, their 20s are a time of discovery. A time to learn what works best in their careers. A time of learning how to grow and manage one’s income. A time of learning how to set financial goals and sticking to budgets. 

A time when you are allowed to make certain mistakes and learn from them. It’s a time when you make a lot of decisions that will have an overall effect on your life.

To believe that you are still young to develop the right financial habits, save money, and grow your income, is one financial mistake anyone can make. Implementing smart money habits in your 20s will put you on the right track going forward.

In this blog post, we’ll be sharing with you 10 dumb things you should never do with your money in your 20s. 

  1. Spending above your means

You see, no matter your age, we all tend to covet all the great stuff other people possess. Just because everyone else seems to be doing it doesn’t mean we should. 

Trying to keep up with someone else’s standards isn’t going to get you anywhere. If anything, it will get you in debt, making it difficult to save money and reach your goals.

Note that the key to financial freedom is to live below your income so that you’ll be able to invest in your future.

  1. Staying too long at a company that has little room for improvement

Fortune estimated that staying at one company for more than 2 years will reduce your lifetime earnings by an average of 50%. Changing your job, however, has the potential to boost your income by as much as 10%-20%.  

  1. Assuming you don’t earn enough money to start saving for retirement

Retirement might seem far when you are still in your 20s. But experts say that if young people do not change their bad savings habits and start investing at a young age, they’ll probably be unable to do that later on in life.

Brad Sherman, president of Sherman Wealth Management says, “The amount you decide on — whether it be 3%, 5%, or 10% of your salary — needs to be a line item in your budget, just like beers or Starbucks are.”

Anything greater than zero is better than zero.” So, even if you earn very little, do not be discouraged. Remember, consistently saving a small amount of money will result in more money upon retirement. 

  1. Not building an emergency fund

Many people go into debt mostly as a result of poor planning for unexpected expenses. Although we all want life to be perfect, unplanned situations are a part of life. They can and do happen, no matter how careful you are. 

For instance, your car might break down or you might fall under the weather and require some medical attention, which is why it’s always wise to have at least $1,000 in your emergency fund, no matter your current financial status.

Think about it this way: what if you lose your job or your company decides to slash your salary? What happens then? You can easily fall back to your emergency funds pending the time you get things rolling back up.

To create an emergency fund for yourself, you can stash six months’ worth of expenses in a high-yield savings or money market account, where you may earn more interest than in a traditional savings account, and it’ll still be easily accessible 

  1. Not setting financial goals

Research has shown that those who plan for the future end up with more wealth than those who do not.

Setting clear financial goals will make it easier for you to manage your money. Write down your goals and make sure they are specific, measurable, attainable, relevant, and time-based. 

Once you have done this, create a budget that can help you achieve these goals, and make sure you stick to your budget monthly.

  1. Ignoring your debts

What can be worse than living your whole life paying a debt?

In 2017, approximately 70% of grads left college with student debt, averaging around $22,135. Unfortunately, student loans don’t go away, so whether you have a student loan debt or credit card debt, it’s important to make sure you have a debt repayment plan in place and not ignore your debts.

  1. Not tracking your spending

When you do not pay attention to how you spend your money or track your spending habits, you’ll likely begin to spend above your means and eventually end up with debt.

Tracking your expenses will help you know if you’re spending above your means in certain areas. For instance, you might be spending a lot of money on eating out, when you really should be putting that money toward paying off your student loans.

Knowing where your money goes into will help you spend below your means and better manage your money.

Jonathan Meaney, a certified financial planner and wealth manager at Carter Financial, says, “You’ve got to know where your money is going and you’ve got to make sure that more money is not going out than is coming in.”

  1. Not considering diversifying your income

Most of us treat employment like something that requires our undivided attention and full commitment, more like our relationship/marriage. 

We are faithful to a single career or a single employer at a time. We devote so much to our primary place of assignment that we ignore all else. 

Perhaps we fail to realize that it’s important to diversify our income in case of a sudden job loss. Having a side hustle can help increase your savings and provide some level of protection and job security in case of a salary cut or unemployment. 

Besides, diversifying your income gives you freedom, as you do not have to live from paycheck to paycheck. Having more than one source of income means more money to invest and save for future projects. 

So, whether you are earning $10,000 a year or $100,000 a year, diversifying your income is a smart way to get ahead.

  1. Not establishing saving goals

Spending your whole paycheck is one of the worst mistakes you can make when it comes to financial freedom. 

It can be difficult to start saving for things that may seem so far off, but if you don’t start early, the costs can wreak havoc at the moment.

Jonathan Meaney says, “You can never save enough. There will always be something to apply that to. The key is that you set goals and prioritize the things that you want and might want down the road.” 

  1. Constantly buying cheap, low-quality items for short-term savings

It’s tempting to try to “save money” by buying inexpensive, low-quality things, but oftentimes those cheap products will cost you a lot in the long run. 

It is important to use value as a bottom line when shopping, rather than going for cheap items. However, in doing this, try to pay attention to pricing, sales, and discounts. This will help you take better decisions.



Thank you.


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