5 Money Mistakes To Avoid In Your 20s


Money mistakes in the 20s are inevitable. Unfortunately, schools don’t teach us financial literacy and money management like they do algebra. However, the financial decisions that you make or the spending habits that you develop in your twenties can affect your finances for the years to come.


So I am sharing a list of five common money mistakes you must avoid in your 20s, and your future self will thank you for it-


Most of the vicenarians spend each and every dime they earn. They indulge in the habit of living paycheque to paycheque- which sooner or later puts them into a precarious position-where one missed paycheque could be disastrous.


This is certainly not the position you want to find yourself in when an economic recession hits.

Therefore, PAY YOURSELF FIRST. When you have money coming in, make savings a priority rather than tackling it after every unnecessary expense is taken care of. Set a goal to first save at least 10% of your income each month for your long term priorities.



Another common money mistake that people make in their 20s is that they do not keep track of the expenses and end up spending above their means.


The simple solution is to LIVE BELOW YOUR MEANS. Remember, just because everyone else seems to be living above their means does not mean that you should too.

Track your spendings for the next 30 days. Knowing where your money goes can help you rein in your impulse spending. Also, strictly following a budget plan can help keep the spendings in line with the goals and priorities.


Money management is a lifelong journey, with lessons learnt at each junction. When unexpected life events occur, such as COVID-19, an emergency fund acts as an insurance policy.


Establish a conservative savings goal to allot at least 5% of your monthly paycheque to your emergency fund for six to twelve months. Then, to build it over time, increase the amount by 1% to 2% at regular intervals.

Building an emergency fund is like having an EXTRA CUSHION OF SAVINGS. It helps you feel secure, eases your financial stress and prevents you from dipping into your savings or getting into debt.


There’s always a reason to put off investing. It could be because you think stocks are overpriced or you are worried about another stock market crash, or perhaps you’re waiting until you’re on a better financial footing to get started. 


There is a significant risk in not taking any risk. Period. If you are not investing, your money is losing its purchasing power since the interest that it is earning in the bank is way too little to keep up with the inflation. 

Investing sooner always wins out over putting it off, as the saying goes – THE RIGHT TIME TO INVEST IS NOW! 


Many of us tend to develop costly habits like eating out too much, shopping for expensive products, partying, gambling, spending millions on an engagement or a wedding function, purchasing fancy cars, etc., in order to ”keep up with the Joneses”.


While it can be challenging to break bad financial habits, changing your environment or surrounding yourself with people who support your financial goals can make a significant impact in helping you break them.

Your twenties are a tumultuous time. From education to courtship, there’s a constant temptation to shell out hefty sums. But just because you have enough money does not mean that you need to spend it carelessly. Instead of spending millions on a luxury car in your early years or on a wedding function, be wise with your money and invest it in long-term goals.



I hope you’ll try and avoid these five money mistakes in your twenty-somethings and smoothly sail into your next decade, being financially sound and secure.

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I'm a dreamer, scribbler, research scholar, and travel junkie from the land of five rivers, Punjab (India). 

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