It is so common to make mistakes with your money. In fact, over 85% of people have admitted to making mistakes with their personal finances. I regrettably joined those ranks. My 20s were a great time, but so many mistakes were made that could have been avoidable.
I never learned about personal finance and never tried to learn. The magic of credit cards let me live my life without worry and I had money in my checking account that was growing. But all of that was an illusion.
My 30s will be the period of time I get on track with my goals and learn to be smart with my finances. But it took a lot of life experience to get where I am and the fire under my butt to learn about personal finance, called a lot of debt.
Below are 8 of the Mistakes I made in my 20s. I hope you can avoid these:
Living Off Credit Cards
I was obsessed with seeing my money grow in my bank account. However, that money was only growing because of the deposits into my account. It was placed in a checking account with no interest rates to boost them up. It was money I left on the table by keeping it in a bad spot.
But the only reason my money was growing was because I was supplementing my living expenses with credit cards. I wanted to “save” money so badly I would put some bills on my credit card. This quickly led to an increasing debt that got out of hand.
What I should have done was to use my credit cards in a smarter way that maximized the points earned and only spend enough that could be paid back the next pay period. I lived above my means and it caught up to me.
Living Without a Budget
Yes, you read that right. Mister Budget lived his life without a budget for many years. And yes, I speak in third person.
Throughout my 20s, I would just live my life blindly, paying my bills then putting everything else on my credit cards. If I wanted to go on a vacation, it would go on a credit card. Birthday and Christmas gifts all put on my credit cards.
There was no 50/30/20 rule being applied here. Of course I made budgets, but didn’t follow any of them, because life has a funny way of not going according to plan.
Without a budget you make a lot of stupid purchases and this is mainly why I fell into debt in the first place.
Not Maximizing 401k Contributions
My company offered a 401k plan to all employees. It sounded like a great idea, but it took my nearly 3 years to suck it and go for it. The idea of losing money on my paycheck was very unappealing, even though it was going towards my own retirement.
It took a lot to get over that mental roadblock, but I still didn’t take full advantage of my contributions. First, my company didn’t match, so I should have placed additional money in a ROTH IRA or some other investments. But second, I was only contributing 6% of my salary.
In reality, I should have pushed a little more till it hurt. By the time I would have retired, that wouldn’t even be close to what I could survive off of. I would have been in a much better condition if I pushed 10% – 12% of my paycheck.
Always remember to figure out how much money you would realistically need to retire off of before starting your contributions.
Not Investing Early
This goes hand in hand with previous mistakes, but I really wish I started investing in my 20s. The magic of compound interest would be pushing my along on its dividend unicorns. I now have to invest more money in order to retire on the same amount I would have if investing in my 20s.
This all comes down to having no financial intelligence. I was never taught anything in school and it was always considered a taboo subject to discuss at home. I had to learn the hard way of managing money.
Going to College For The Sake of Going to College
College isn’t for everyone. I’m not against college, but I also don’t think it’s absolutely needed to get ahead in life. It helped me become the man I am today and the social skills needed to get by. I also met my wife in college!
But I ended up working in a field completely different than my major. I thought, hey I’m good at drawing; let’s find a major that will let me get a job doing that. Unfortunately, my college offered no helping hand in finding a job. I eventually got my Masters Degree to help me jumping into a new career path.
More money wasted just to get a dead end job I would end up hating in a few years.
Asking My Wife Her Biggest Financial Mistakes
Too Complacent In my Under-Paying Job
When I first got my job in New York, it was a dream come true. I was working on interesting projects and making more money than I ever had. I loved my boss and life was good.
6 months later, promised raises were ignored, interesting projects became boring and my boss left. What was left was 5 more years of tedious work, no raises and a boss that was condescending and miserable
The worst part was I stayed there. I grew complacent in a job where I knew how to do it, excelled in it and got to work from home. The pay was horrendous for the amount of work I did, the location and for managing several other workers.
Watching people I once managed and trained get promoted before me was hard to watch, but at least I could be lazy and delegate all my responsibilities to others. Eventually life caught up and decided to work with my wife. I couldn’t be happier with that decision.
Finding the Easy Way Out
I wished I didn’t spend all those years trying to find a “get rich quick” scheme. Those shortcuts in life never work and are lies. I did so much research on ways I could get a stress-free life without putting in the work to get there.
I suppose I fell into the group of people needed instant gratification. Thank you Internet. I now know you need to work hard for what you want in life. There are no shortcuts. But the end result is so much more rewarding and worth the journey.
