10 Money Mistakes to Avoid in Your 20’s

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We all make money mistakes at some point in our lives, but more so when we are in our 20’s.

During my early 20’s, I hit rock bottom financially and I decided to be more responsible with my finances and think about the future—do I want to keep working until I retire?

After my consultation with a financial adviser, I realized that there are so many things I should have known about money.

Funny enough, until now, I have debts that I’m paying. Though I could proudly say that my financial knowledge now is way better than before.

At the start of 2020, I read about the Total Money Makeover book was an eye-opener for me. Although I am aware of some of the finances, the Total Money Makeover book helped me have a clearer direction when it comes to my finances.

Anyway, here are the 10 money mistakes I made in my early 20s that you should avoid!

Not tracking where your money goes

During your 20’s, you are more likely to have a disposable income. Money goes in, and you have a lot of expenses not knowing where it went.

At the end of the week, you will just know that you have spent all your money on something not practical and useful.

We all have the same mistakes!

Keeping track of where you spend your money can help you get an idea of which expenses you could lessen or avoid in the future. Then you will see your spending habits!

Living beyond the means

It’s easy to have a lifestyle more than you can afford.

In your 20’s, that’s where you get your first paycheck so everything seems exciting.

Who doesn’t love the feeling of having the means to buy whatever you want without depending on your parents’ money?

The problem comes when you start living beyond your means, then it could lead you to depend on your credit cards and only paying the minimum!

Counting the money you don’t have

Who doesn’t do this?

This is the worst money mistake you need to avoid because counting the money you don’t have gives you an unrealistic understanding of your actual money.

In the Philippines, we have something called ’13th-month pay’ where we get an extra 1-month salary before Christmas. That time, I often make a list of how I will spend that money once I get it.

Counting the money that you don’t have is just pure greed. What happens now if that money didn’t come?

Nowadays, I plan my finances for the entire year. We have a salary increase during the first quarter of the year, but I still use my previous salary when doing my finances.

Whatever excess money that I have, I immediately put it to my savings and pay off my debts.

Not setting financial goals

After graduation from college, I wanted to have a PHP 1 million on my bank account by 25. That time, I have no idea about investments.

I depended on my salary and with only 4 years to save & bills to pay, obviously, my salary is not enough for me to reach that goal. It felt unrealistic, so I said maybe next time.

Later on, you will regret not setting financial goals in your 20’s.

Your 20’s should be an opportunity to focus more on finances because it gives you more room for risks. You won’t feel more cautious with how you invest your money, and the compound interest really makes a difference!

Depending on credit cards and paying the minimum

Ah, credit card debt. It’s still haunting me! I realized that I got myself into credit card debts because I know I can still pay it—I can pay its minimum.

Having a credit card seems like free money until you see your bills!

If you cannot manage your finances properly, it is best to avoid credit cards since you are more likely to fall into debt!

Credit cards might help you in the short-term, especially when it is an emergency expense, but at the end of the day, you still have to pay it back.

The problem occurs when you only pay the minimum and eventually the total interest you have to pay will snowball.

Rather, start building an emergency fund as little as $1,000.

Not preparing emergency funds

When you don’t have an emergency fund, you are more likely to borrow money to deal with the unforeseen problems.

You might think it will be one time, but no. There will be one more time after another.

This is one of the money mistakes to avoid because you do not only deal with financial stress, but you also have to deal with emotional stress.

I have responsibilities not only to myself but also to my family.

Not preparing emergency funds would not only make me suffer, but my family will suffer too.

Living paycheck to paycheck

This money mistake is related to not preparing emergency funds.

Most of us probably lived paycheck to paycheck during our 20’s. I feel proud that I am paying my bills and responsibilities every month, but every single time, I wait for my next paycheck and nothing goes to my savings or investments.

And, because nobody told me about the money mistakes to avoid during my early 20’s, I did not have an extra money that I can save but rather I used that extra money to pay my debts! Don’t be like me and be responsible!

Lifestyle Creep

Lifestyle creep is where you increase your spending as your salary increases.

I often tell people that I need more sources of income so I can support my lifestyle. I noticed that every time I get more salary, the former luxuries for me become a necessity.

That’s why I see that my money increases, but my savings per month do not increase because I upgrade my lifestyle instead.

What a total money mistake.

Imagine the amount of money you could have saved if you did not increase your spending as your salary increases? You could have invested that money.

Bad investments

Because I don’t have enough knowledge when it comes to finances including investments, I have had a fair share of bad investments.

One of the worst money mistakes was when I spent more than PHP 50,000 on this agency in New Zealand because I thought it would be worth it in the future.

I’ve done my research, but I had an instinct from the start that I shouldn’t put my money on it. Every single day I convinced myself that it’s going to be fine, it is worth it, and this is how it is supposed to be.

Up until this day, I still didn’t figure out if I got scammed; I couldn’t accept that it was a scam.

If I have invested it correctly, I would have gained more money instead.

Before you invest in something, research first and check 100x if the company or person is indeed trustworthy. Remember, you worked hard for your money.

Not investing early

It’s bad enough that I had bad investments, but it’s worse than I did not start investing as early as possible.

When you don’t invest early, you have fewer chances of earning passive income and growing your investments.

Little did I know about the power of compounding interests. The earlier you start, the more money you’ll have!


What are your money mistakes? Can you also relate to some of the money mistakes too?

We all have money mistakes at some point in our life. It happens and it’s difficult to avoid especially when you don’t have proper financial knowledge as I do.

These money mistakes shaped me and I’m glad that it happened now. I still have time to fix these money mistakes and make sure that it won’t happen again.

I would love to hear your thoughts! Feel free to comment down below.

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5 comments
  1. As a person in her early 20’s (well, almost to my mid twenties…. or perhaps I already am in it!), this is a really helpful post. I relate most with not tracking the money that I have; I would go out with friends to eat out on weekends, and I don’t realize that I’ve already spent so much on these hangouts! I’ve started becoming more mindful with where I spend my money since then.

    Thank you for sharing with us your insights 🙂 I’m glad to have found you through Bloglovin’, and I’m following along to read your future writings!!

    Anna Jo | http://helloannajo.blogspot.com

  2. Sometimes it’s easy to just spend without tracking where it went! I’m happy that now I don’t need to use cash so all my transactions are in my debit or credit card. We have an app here that will automatically categorize your expenses and I get notifications if I go over my budget too! 🙂

  3. I just got laid off from the airline company I worked at. After receiving our separation pay, I immediately bought an inverter washing machine because I think, I deserve it anyway and it is practical. The only mistake I did was I spent a huge part of it on my wants including shoes, slippers, books, etc. I wanted to save that money but it’s too late, I only have 2k on my debit card waiting for our last pay and 13month to come, god-willing. I keep doing the same mistakes but I’ll make sure I’ll finally save that money and go straight to my savings account!

  4. I can totally relate in this article! Early 20s was really a happy go lucky kind of moment. Now that I am more aware of my financial state and knowledge, I get to share it with my younger siblings. The guidance I lack before will not happen to them. This is such a good read 😊 Karen, didn’t know you can write this damn good! Proud of you 😘

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