7 Money Mistakes to Avoid Making in Your Twenties

Let’s be honest. Being an adult isn’t always fun. In fact, sometimes it’s just downright hard. Not only are you tasked with forging a successful career and handling real-life responsibilities, but you also need to get the hang of the ins and outs of managing your own finances. Successfully managing your own money can be a little overwhelming, especially if you aren’t armed with the right knowledge and training. Sure, you probably had an allowance as a kid. But, deciding between purchasing that S Club 7 CD or those pink glitter jelly shoes isn’t quite the same as understanding interest rates and planning for retirement.

So, you may just be thrown into the world of overseeing your own finances, all while feeling like you don’t quite know what you’re doing. Money management is a learning process, and you’re bound to hit a few bumps in the road. But, there are a few things you should definitely avoid doing in your young adulthood, in order to set yourself up for a successful financial future. Here are seven money mistakes to avoid making in your twenties, at all costs (pun intended).


1. Disregarding the Future

I’m totally in favor of the “live for today” mentality that encourages adventure and spontaneity. But, do you ever think about what comes after today? Tomorrow. Planning your financial future sounds like something only old people need to worry about. However, you absolutely need to think about your long-term goals and financial strategy in order to successfully manage your funds for the long haul. Do you want to purchase a home soon? Do you ever want to retire? What are you going to do if you unexpectedly lose your job?

Sit down and determine your future plans. If you’re aiming to purchase a home soon, start setting aside money to make that happen. If you worry about job security, start contributing to an emergency fund that can cover a few months of your expenses if you find yourself in unfortunate circumstances. It’s never too early to start thinking about retirement, so begin contributing to a 401(k) or an IRA. Whatever your future goals are, you need to make sure that your finances can support them. So, be proactive and start planning now.


2. Not Setting a Budget

Setting a budget goes hand-in-hand with determining your future financial plan. It can be all too easy to lose sight of your income versus your expenses on a monthly basis. So, it’s crucial that you take a hard look at your monthly income and your average expenditures in order to establish a personal budget.

Think of your budget as the roadmap of your monthly finances. It will keep your spending under control — particularly if you’re somebody who tends to blackout shop in Target — as well as ensure that you’re being smart with the rest of your money. Many people equate the word “budget” with “restrictions”. However, that doesn’t necessarily need to ring true. Be realistic when setting your budget. If you enjoy going out to eat several times a week and are able to financially support that habit, then work that into your budget to ensure that your plan will work for you and is something that you can stick to.

Setting a budget doesn’t mean cutting out all of your fun and frivolous expenses. It’s just a way to keep you on track.


3. Relying on Credit Cards

I’m sure you’ve heard many warnings about the dangers of credit card debt and that I don’t need to drone on and on about it. However, treating credit cards like a personal loan program can be detrimental to your financial well being, so I couldn’t just leave it off the list. Do whatever you can to prevent racking up a large balance on credit cards. The interest rates are astronomical, and you’ll quickly find yourself in a hole that’s nearly impossible to climb out of.

Many people say that it’s important to establish a good credit score when you’re young, and I won’t refute that statement. Good credit is important, but you can establish it without spending beyond your means. Plus, how do you think your credit score will look when you’re $30,000 in credit card debt?

READ: This Is How You Can Improve Your Credit, Right Now


4. Refusing to Demand What You’re Worth

Whether you run your own business or have been on your fair share of job interviews, we all know how awkward it can be to discuss payment with a potential employer or client. Sometimes, it’s just easier to accept what they offer and call it a day. But, you simply can’t be afraid to demand what you deserve!

People typically don’t fork over extra cash without being prompted, and negotiating will always be a little awkward. However, a moment or two of uncomfortable conversation is well worth the increased dollars in your pocket. So, suck it up and demand what you need!


5. Using Money to Show Off

When we spend a good chunk of our lives on social media, comparison becomes way too easy. It can be tempting to fall into the “keeping up with the Joneses” trap and start purchasing expensive things just for the sake of showing everybody that you have them. Your value and self-worth aren’t directly correlated with your finances; so don’t feel pressured to use money as a tangible indicator of how fantastic your life is. You don’t need to buy that round of drinks for everyone or have the latest iPhone. You’re fantastic regardless.


6. Spending Recklessly

Getting your first job and your first paycheck is exciting! You’re allowed to feel pumped about it, and even treat yourself to something special. But, there’s a big difference between celebrating and going on a reckless spending spree. Trust me, irresponsible spending is a bad habit to get into.

Establish a savings account and get yourself into the routine of putting away a certain percentage of your paycheck early on. Many employers offer a split direct deposit system, where a certain amount is deposited to your checking account and the rest immediately goes to savings. This is an easy way to build up decent nest egg, without ever being tempted to spend the money! Out of sight, out of mind — it’s an effective strategy.


7. Thinking That Money is Everything

I have news for you: money isn’t synonymous with happiness. Some of the wealthiest people in the world are actually pretty miserable. So, don’t confuse “success” with “money”. Success involves so much more than just your finances. Does your job fulfill you personally and professionally? Do you have fantastic friends and family members that make you feel loved and appreciated? Do you make time for hobbies and interests that you enjoy? If you answered yes to those questions, then you’re already pretty darn successful.

Yes, responsible money management is important. But, money isn’t the be-all and end-all of a wonderful, happy life. You need to stay on top of your finances. But, you can’t forget to go out and enjoy the fruits of your labor every once in a while!

  • kate_quinn_1

    Hey Kat, this is a really great post, and I couldn’t agree more! I think it’s really easy to get wrapped up in living for the moment and to avoid future planning when you are young, and expensive life events (marriage, buying a house, having a child) may not be in your near future. However, the sooner we can save and act responsibly, the better off we’ll be. I wish I could go back in time and say NO to a lot of those Forever 21 dresses purchases and put all of that money in a savings account! Not to say that you can’t splurge a little, but to realize the power of savings is a powerful thing. I wrote a post about using Mint.com to save, hopefully this serves as inspiration as well: bit.ly/1Fclyua


    • So glad you enjoyed the post, Katie! I’m totally with you… I was a pretty irresponsible spender in my younger years. I wish I would’ve known how expensive life can actually be (student loans, ugh), so I could’ve made some smarter decisions early on! Oh well, live and learn.

      I’ve heard a lot about Mint.com, but I’ve never actually tried it. I checked out your post, though, and I’m thinking I might just have to give it a go!

      Kat 🙂

  • Kat! Love, love, love this post! My roommates and I were just talking about money & budgeting last night. It is so so important yet so many young adults do not think about it and live large.


    • Thanks so much, Megan! When it comes to budgeting and saving, I think it’s so easy to fall into the trap of thinking, “Oh, I’ll do that soon…”, and then never actually starting. I’d encourage anybody to start saving as soon as possible, even if it’s just a small amount per month!


  • This is really invaluable advice! Numbers 1, 4, & 6 really go hand-in-hand. Happy Wednesday

    • So glad you liked it! I totally agree… it really takes a combination of things to set up a successful financial future for yourself!


  • #4 is something I just recently got the courage to do. So awkward. I just kept thinking.. what is the worst that could happen? They say no and on to the next opportunity!


    • Ugh, I totally agree. Negotiating payment can be one of the most uncomfortable things. But, like you said, the worst they can say is “no”! At least you tried, and that just means you can move on towards bigger and better things!


  • This was an awesome post! I already practice a few things on the list, but there are some things I’m definitely going to try in the future! Putting a little bit of money away from each paycheck is an awesome tip and I’ve been doing it for quite some time and it has really helped build up my savings in case of an emergency.

    • So glad that you found the information valuable! Building up an emergency fund is so important. I think when you’re still young, it’s easy to hang on to a little bit of that “invincible” mentality you had when you were a teenager. But, being prepared is always smart!


  • Great post! You hear these things all the time, and it’s easy to brush them off, but the older I get, the more I’m learning just how important they are. (Especially credit cards. They get away from you waaaaay faster than you think they will, without you even realizing it. Trust me!)

    • Oh, I totally agree, Brittany. I’ve heard so many horror stories about credit card debt that, honestly, have always sort of scared me away from using my credit card extensively. I feel like you can dig yourself a whole really quickly!


  • Alexis Scott

    Thank you so much for this post! Studies show that between the ages of 18-24 is when people develop their money habits and often make excuses for developing better ones later. But this posts talks about things that can be prevented now and this is how good money habits are formed. I liked this post so much I featured it on my blog, https://delightfullyalexis.wordpress.com/

    • Glad you liked it, Alexis! I totally agree… the decisions you make early on really shape your financial behaviors later in life. Thanks so much for sharing it on your blog!


  • Wow, great post- it really sums up everything I have been dreading to do for months.. I think especially when you´re financially supported by your parents you tend to simply overspend “your”/their money and fall into a vicious circle of buying needless things as you just don´t learn to really appreciate the money you have. Plus, I really think that number 5 is an issue to so many people today as they (including me) identify themselves through their material possessions.
    Awesome that you touched on this rather sensible topic in this post!
    x Mila https://matchlessmila.wordpress.com/

    • That’s such a great point, Mila… and, it’s one my dad frequently reminded me of when I was a teenager. He always says that it’s much easier to spend someone else’s money, which I think is definitely true. And, yes, when we’re young it’s way too easy to let all of our self worth be tied up in what we have. Social media probably doesn’t help!


  • Ashley

    Great article! As a money coach, these are things I tell my clients all the time. They are also mistakes I made early on in my money journey! It is never to early to start planning for the future. I know it can seem very daunting, but even putting a few dollars a month towards your emergency fund, savings goals or retirement plan can really add up. Starting to invest can also be daunting but who doesn’t want their money to grow? Contrary to popular belief, you don’t have to be rolling in the dough or working on Wall Street to be an investor. This month I’m focusing on investing on my blog, the Fiscal Femme. Here’s my #1 investing tip! http://thefiscalfemme.com/2015/07/my-1-investing-tip/

  • Too late for me, sadly, I’m 31 and just now financially in a place where I can save money and not be paying off bills (medical and otherwise) for other people. I wish I had been privileged enough in my twenties to be able to spend the little money I made job hopping and dealing with mental illness on myself, but sadly I had people to take care of.

    It’s good that things are changing up for me now, because I want to be able to live on my own terms and decide what to do with my money – even if those choices are decidedly unconventional!

    On The Cusp | https://on-th3-cusp.blogspot.com/

  • Ashley C Butler

    I love this and I think the tips are spot on – especially the one about asking for a raise. Us younger ladies tend to be so afraid to do that and I’ve only ever gotten what I’ve asked for, so might as well go for it!

    One thing to think about as editors of The Everygirl- on the piece about knowing your worth and not letting social media aka keeping-up-with-the-digital-joneses, perhaps it’s time to consider posting less about clothing/furniture/home goods sales and more mentally and emotionally in-depth content. I definitely feel pressured to get the latest x,y,z when i see a publisher i like and respect posting about it, unfortunately for me. I like the round ups and am always open to taking inspiration from Alaina and Danielle’s wardrobes, but I wish I saw less “Swipe up to see everything we’re shopping at the Nordstrom sale!”

    Food for thought. 🙂


  • I am here for this post! In all honesty, I must admit that at 24 I am guilty of a lot of those points, but don’t worry, your girl is about to shape up and get those finances in check (pun intended). In all honesty though, this is a quality post with some amazing advice, I just wished I’d read this earlier!

  • This post was really informative! I once read a statistic that young people often don’t have enough savings. I’m currently saving up for a car, automatic savings have been really useful for this!