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Your 20s are very important years to begin laying the foundation for the decades to come.

You can develop habits that will either help or harm you, you will make decisions that lead to certain outcomes, and you can play a huge role in shaping your future.

Below are several financial mistakes that I believe are important to avoid in order to create a healthy financial life. All of which can impact other areas of your life too!

Not Investing in Yourself

Many people in their 20s tend to neglect themselves physically, mentally, and in other areas. There is a misconception that the choices you make while young won’t affect your future much, but that’s not true.

This comes in financially because you can choose to invest your money in the right places, reduce/remove your spending in the wrong places, and prevent future expenses by taking care of yourself now.

It’s also worth mentioning that investing in yourself does not necessarily mean you need to spend money. It’s also about investing time/effort to create a better future.

Here’s what I mean:

-purchasing healthy, clean foods
-getting enough sleep
-getting a gym membership/personal trainer
-getting regular exams at the doctors (medical, vision, dental)
-wearing correct/proper glasses/sunglasses
-getting massages/adjustments
-proper recovery (stretch, rest, water)
-wearing sunscreen/caring for skin
-avoiding smoking/over-drinking

-going to therapy if necessary
-getting proper rest
-getting out of toxic relationships

Other things:
-learning regularly (taking courses)
-consistently reading (personal development and finances)
-developing new skills
-forming relationships
-hiring a coach (life, business, career)
-healthy habits overall

By developing the right habits and ending bad habits, you lay a strong foundation for your future. You will increase your chances of aging gracefully and being on the right financial track.

Taking financial advice from the wrong people

Most commonly you will take financial advice from your parents.

Unfortunately your parents don’t always know best. Nor do your siblings or best friends.

The general rule of thumb here is to avoid taking financial advice from anyone whose situation you would not want to trade with/be in.

I’ve been led down the wrong path several times despite good intentions and now I have learned to do my own research and make the decision best for me.

People will tell you what to/not to invest in, that you need to buy a home, that you need to go back to school, not to pay off debt, what job to take, etc.

You can listen to their opinions, but since you are an adult you get to decide what is best for you. If you listen to the wrong advice you could end up in a situation that leaves you stressed and resentful.

Make your own decisions.

Not learning about finances/not getting your finances in order

Money is important whether you like it or not.

Once you become an adult (and especially in your 20s) you will begin facing debt, bills, a career, investing, and so on.

If you learn about finances in your 20s you can get a huge head start in life.

There are people in their 40s and beyond who still have student loan debt, live paycheck to paycheck, have a $500+ car note for decades, have $0 in retirement accounts.

You can begin your smart financial journey at any age, but the best time to start is now.

Read, watch, and listen to people talk about finances.

Always pay your bills on time.
Make wise financial decisions.
Create a plan to pay off debt and/or to invest.
Stop spending so much money.

Again, you can create a very promising future by making the right choices today.

Taking out unnecessary loans/debt

In college I probably took out at least $20,000 of unnecessary student loans.

I took out more for “living” expenses but in reality a lot of that money was also spent on crap.

Likewise, many 20-somethings will take out a personal loan to pay for their wedding or go into thousands of dollars of credit card debt to go on vacation.

Instead, think about how it will feel to have to make those payments later (with interest).

Sometimes we live too much in the moment and fail to think of the consequences.

Co-signing on a loan

This was my worst financial mistake and I really hope my story will stop people from doing the same.

You can listen to my story below:

When you co-sign on a loan YOU are also responsible for the payments. The person you are co-signing for may say they will never miss a payment, but sh*t happens. If payments are not being made, you will have to pay them OR your credit will be affected. 

That person could also be the love of your life, your child, your parent, or your best friend. People you love and trust. However, things can change and when you tie money into things it usually doesn’t end well.

Unless you are 100% OK with taking over the payments if necessary, DO NOT co-sign.

It caused a lot of stress in my life. I lost sleep, time, and money. PLEASE don’t co-sign on anything.

Not actively paying off debt

Debt is normal. Which is exactly why people continue to live paycheck to paycheck and work forever.

If you have debts that “should” take 7-10 years to pay off, you actually should be trying to pay those off in half that time or less.

Debt is risky. If you lose your job, face a pay cut, or if an emergency comes up and you have hundreds or thousands to pay on debts each month, life gets stressful.

Imagine not handing your hard earned money over to multiple lenders each month. You get to keep your money and you don’t owe anyone anything. 

Society conditions us to constantly be in debt. From teenage years to death, many people stay in debt.

Break that cycle and take responsibility for the money you have borrowed. Once you are debt free it will be way easier to invest and save for whatever it is you will need to buy.

Not contributing to retirement accounts/investing

Paying off debt while young is one thing, but investing is extremely beneficial the younger you start.

I’m aware that Dave Ramsey suggests not to invest at all while paying off debt, but I disagree.

Depending on your timeline, I think it’s best to do both.

If your job offers a match, start there.

Outside of your job you can contribute to a Roth IRA and/or invest in ETFs, stocks, mutual funds, etc. Even if it’s just a little bit each month, time and compounding interest will work in your favor.

Look at the chart below:

This is an area you really want to:

  1. Make your own decision in
  2. Do a lot of research/educate yourself
  3. Understand the risks/what you are doing

Personally, I invest $100 into my Roth IRA each month WHILE I am paying off debt. Once my debt is paid off, I will invest way more aggressively.

Buying things to impress others

“We buy things we don’t need with money we don’t have to impress people we don’t like.”

People don’t care. And if they do…why should you care?

When you go out do you even look at what others are wearing? Do you care? Do you remember?

Sure you may recognize that designer bag or admire their lamborghini, but then what? You go home and you live your life and probably won’t think about those people again.

People are more concerned about their own lives. Buying things to impress others will only make yourself feel worse.

You can feel confident and good about yourself without so many materialistic things. You start to live for yourself and buy things that actually bring joy and quality to your life.

My family, my boyfriend, my co-workers, my boss, and the cashier don’t care what shoes I’m wearing or the bag I’m carrying. And if they do, that’s their problem. 

Lifestyle creep

During your 20s you will likely experience a large increase in your income. You will feel you “deserve” or need to adjust your lifestyle.

This is called lifestyle creep or inflation.

Your new salary may cause you to move into a large home, buy a brand new car, or start purchasing excess clothing.

Obviously there are some situations where you can upgrade, but I’m sure you were living just fine before.

If you can maintain the same or similar lifestyle that you had with a lower income, you can make huge progress on paying off debt, saving, or investing.

When you inflate your lifestyle you cause yourself to become stuck. You now NEED that job to be able to afford your increased expenses.

This cycle can continue for a very long time and you could be making $500,000 but STILL living paycheck to paycheck and feel financially stressed.

Not creating multiple sources of income/side-hustling

We live in a beautiful time where we can work a full-time job and then come home and make more money online or through apps.

Having one source of income can be risky. If you lose that one thing, you won’t have anything else.

If you have multiple sources of income and only one is lost, the impact is not so bad.

This also allows you to increase your income to pay off debt, save, and invest. 

While in your 20s you probably have more time and energy plus less commitments. It’s one of the best times to pick up an extra job, start an online business, flip clothes/furniture, etc.

Every little bit helps and it can be very enjoyable.

For example, I make a few hundred extra each month from blogging, selling products, and uploading YouTube videos. I love doing these things because it allows me to express myself and help others all while making a little bit of extra cash.

I wouldn’t be filling my time with valuable things otherwise, so why not?

If you’re using all of your free time to watch Netflix, scroll through social media, or just hanging around, you should definitely consider some side work.

Your 20s are a time for growth and learning.

You will learn a lot from your own mistakes and from other people’s mistakes.

No matter what age you are, you can avoid these mistakes or turn them around and not make them again.

Since you’re reading this I hope it helps you or someone you know.

By starting young, we can create our ideal future and I find that very inspiring.

*This article was originally published on