Common Money Mistakes People Make In Their 20s

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Shorter Version

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“The two worst strategic mistakes to make are acting prematurely and letting an opportunity slip.”

~ Paulo Coelho

Why would I make money mistakes?

You’re 20-something now – you have a job and are making real money for the first time in your life. But, being responsible and managing your money is new to you. You’re so excited about having a job in your field and receiving regular paychecks, you almost lose your mind purchasing things. Yes, you are grown. But, if you are immature or haven’t been taught how to budget, your life could quickly spin out of control, leading to depression, anxiety, debt, or all three!

Inexperience and naivety

The truth is, you are more prone to making money mistakes in your 20s. Why? Because of inexperience and naivety. You have a ton of emotions and hormones coursing through your body which, at times, can come across as impulsivity and financial carelessness. The result? Debt and a whole lot of emotional angst; that is why I suggest you pay close attention to your financial situation while you are still young.

Don’t let it ruin your life

The last thing you want is the mistakes you make in your 20s following you into your 30s and beyond. The good news is there are ways you can avoid anxiety-provoking money mistakes while you are young so they don’t come back to haunt you. 

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Actionable Steps


Don’t purchase items to feel happy

Purchasing items to feel happy may be the most common money mistake young adults make. Many 20-somethings equate success and happiness with money – specifically, spending money. These young adults purchase items because it makes them feel good initially. However, just like with addiction, the desired effect typically wears off, requiring more purchases to attain the original pleasurable feeling. The result? Some young adults end up with massive debt they can’t immediately pay-off. This, in turn, eventually leads to anxiety and depression.
So, how can I avoid this money mistake?
By staying away from malls, brick-and-mortar stores like Walmart, Macy’s, and Target, and online stores like Amazon, Etsy, and eBay, when you are depressed, tired, angry, or having a bad day. Heck, also avoid these places when you’re having a good day!
In other words, find other things to make you feel happy – i.e. volunteering at the Lupus Foundation, at a Children’s Hospital, and/or an animal shelter or finding a hobby you are interested in or passionate about. This could also involve starting a new DIY home improvement project or working on your self-esteem and self-confidence. You could also spend more time with your BFFs or do free online learning classes. There are lots of ways to make yourself happy; ways that do not involve addictive behaviors.   
If you have to go into a store, only go in stores or visit websites when you need something. And, only purchase the items you have on your list – not other items you see and want. Make a shopping list and check off each item when you pick it up. Pay for the item or items and immediately leave the store. Do not, under any circumstances, keep looking around once you have collected and paid for the pre-determined items.


Choose growth over money

Many young adults want to make a lot of money as quickly as possible. But, this is where they run into trouble – serious trouble. Turning down lower paying jobs that offer incredible opportunities to “grow” with the company is one of the most common money mistakes 20-somethings make.
Although these “growth experiences” may not be ideal for “up and coming” career dynamos, they are still important for one’s mental and emotional health. In other words, these “experiences” can do wonders for your self-esteem, self-confidence, and peace of mind. That is why these learning opportunities are essential for your future financial success.

If you are offered a job that can provide you with advanced skills that you can use when you apply for a promotion at your current company or a higher paying job at another one, take it (as long as you can still pay your bills). You may not make a ton of money at first. But, with your advanced skills, you’ll be able to snag a position that pays twice what others are getting paid with less experience.

How can I grow in my position and with the company?

Once you have the job, learn everything you can about your position and/or take classes that will provide you with additional skills. For instance, if you have an office job but don’t type very fast, take an online typing course to improve your speed and accuracy.
Or, ask to “shadow” a co-worker who has been doing the job longer than you so you can pick up some of his or her ways of doing things. Basically, learn all you can learn about your job and the company. Don’t be shy about asking to learn new things and/or to help out in other departments.


Use those benefits

Another terrible money mistake people in their 20s often make is forgoing their employee benefits, specifically their retirement, 401k, and health insurance. Why is this a mistake? Because you are actually paying for those benefits – out of your paycheck every week, every other week, or every month. If you are paying for them, why not enjoy them? Plus, by contributing to your 401k and retirement, you are preparing for the future – i.e. if you become ill or later retire.
When you don’t partake in the employee benefits like company-sponsored health insurance plans, you run the risk of becoming ill and not having the money to pay for doctors’ appointments, medications, surgeries, and/or hospitalizations. If you are unable to seek services when you are ill, because you can’t pay for them, it can lead to anxiety, depression, panic attacks, mood fluctuations, etc. The same thing can happen if you retire and do not have enough money to pay your bills or enter an assisted living facility or nursing home.
Therefore, if your company offers employee benefits, take advantage of them. The goal of these benefits is to help you better balance the work/life element so you are happier and more at peace. So, take advantage of the reduced gym memberships, cellphone discounts and cars, and anything else your company offers.


Read the longer version

If you’d like to learn more about common money mistakes young adults make, check out the following articles: 6 Surprisingly Common Financial Mistakes People Make in Their 20’s, The Psychology of Finance: Understanding the Behavioral Dynamics of Markets, and Money and Happiness.

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About the Author

Dr. R. Y. Langham

Dr. R. Y. Langham

Ph.D. in Family Psychology

Ree has a Master’s in Marriage and Family Therapy (M.M.F.T.) and a Ph.D. in Family Psychology. She spent over ten years counseling families, couples, individuals, and children on adjustment issues such as blended families, same-sex couples, dysfunctional family relationships, relationship issues, etc. Now she writes for famous health organizations and is a published author.
Full Bio | LinkedIn

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