Financial Mistakes to Avoid Making in Your 20s

Not Saving for Retirement

The effects of compounding growth and investing in your retirement at a young age are tremendous! Ask any financial advisor! If you can afford to save and invest when your 20 as opposed to when your 30, you will be that much more ahead of your peers. Your nest egg will be that much more significant in the long term and your extremely like to be on the path to becoming a “401k millionaire”.

Not Assessing the Value of a Dollar Today vs. Tomorrow

This is one of the biggest mistakes many young adults make. When you’re in your twenties it’s crucial you understand and adopt “financial sense” that appropriately assesses the value of a dollar now vs. the value of a dollar down the road. A good question to help you gain a better grasp on this idea is: “Would you rather have $1,000 today or $250 a year for the next 20 years?”. $1 today is worth more than $1 next week (we all understand this, time is money after all) but to what degree are you weighing the short term vs. the long term? If you would rather receive $1,000 now as opposed to the residual over 20 years, you are focused too much on the short term! Doing all the above will also help you make better financial decisions.

Not Having a Clearly Defined Budget

It’s extremely important to make a habit of budgeting in your 20s. Financial literacy is a tool often left neglected until students join the work force. It’s really important to adapt these habits early on so that you can prepare for life and achieve all your goals. Spending without knowing your budget is a sure-fire way to rack up debt and can lead to a slippery financial slope. It can make it much more likely that to cause significant financial hardship

Frivolous Spending & Borrowing More than You Make

Everyone make mistakes when their young and this is to be expected, nobody is perfect. However, it’s really important to set responsible financial habits when you’re young. Never spend more than you make and never make charges to a credit card for unnecessary purchases or vacations. The key here is to live “within your means”. If you exceeds whats available to you, you get yourself into trouble and this is where the mistakes happen.

It's also important to take the time to learn about good financial habits and make sure you set financial goals! Familiarize yourself with budgeting (feel free to use a budget calculator) and make sure that you

A wise man once said: “You get an education to land a 9 to 5 but you get a financial education to quit your 9 to 5”. This is the mentality you need to adopt in your twenties, so that you can live the rest of your life comfortably and without the burdens of financial stress.