10 Common Money Mistakes in your 20s
Let's dive in and see how many I made in my 20s
Note these examples were all taken from chat gpt and I’ll be leaving my notes in italics
- Living Without a Budget
It’s tempting to “wing it” when you first start earning. But without a clear budget, money slips through your fingers faster than you think. A simple 50/30/20 breakdown (needs/wants/savings) can keep you on track without overcomplicating things.
For the majority of my twenties I was not making very much money. The main reason being that I took 3 post secondary educations. (university, college and a tech bootcamp). I had a budget but it definitely wasn’t 50/30/20 so maybe a 0.5 here
- Racking Up Credit Card Debt
Credit cards aren’t bad—if you pay them off in full each month. The mistake is treating them like free money. High-interest debt can bury you quickly. Use credit cards for rewards and convenience, not as a crutch.
I managed to stay away from credit card debt but I did have line of credit debt. I had both a personal and a student line of credit. I was lucky to have my parents co-sign for me. It took me awhile to pay it off and I was lucky to have parents and a friend help me out. Maybe another .5 on this one
- Ignoring Student Loans
It’s easy to put student loans on autopilot or defer them, but ignoring them just makes the balance grow. Even small extra payments toward principal can shave years off repayment.
I’m happy with how I handled my student loans, for OSAP I switched to twice a month payments and rounded up to the nearest $25. For the student line of credit I did minimum payments until I paid off the higher interest rate personal line of credit.
- Not Building an Emergency Fund
A $400 car repair or a sudden medical bill shouldn’t send you into panic mode. Start with $500–$1,000 in savings, then work your way up to 3–6 months of expenses.
I rolled the dice on this one by focussing on paying down the personal line of credit. Idea here is that if I needed money for an emergency I could tap back into the line of credit space I had created. However technically they slight increase in payments to student loans I couldn’t access so perhaps another 0.5
- Delaying Investing
Retirement feels lightyears away in your 20s, but time is your biggest wealth-building tool. Thanks to compounding, investing even a small amount early can beat saving larger amounts later.
As soon as I was able to invest I did so in very small amounts to get the ball rolling
- Lifestyle Creep
That first paycheck feels amazing—and suddenly dinners out, new gadgets, and trendy apartments feel “affordable.” Lifestyle creep (spending more as you earn more) quietly kills savings goals. Instead, bank raises and bonuses toward long-term goals.
Lifestyle creep is something I did a fantastic job of avoiding. Luckily I had many friends that were in the same boat and we took this very seriously.
- Neglecting Insurance
Health, renters, and auto insurance might not feel exciting, but skipping them can wipe out your finances in one unlucky event. The right coverage is less about what you spend and more about what you protect.
Last week I spoke of a friend who did not have insurance and ended up paying the ultimate price when his belongings burned. This has been etched in my mind and I always get some for of insurance. I do however keep the amount low down towards replacing what I need and not being over insured.
- Not Setting Financial Goals
Without clear goals, it’s easy to drift from paycheck to paycheck. Whether it’s buying a home, paying off debt, or traveling, goals help guide your money decisions and keep you motivated.
Financial goal setting has never been an issue for me and even when I didn’t have much I still set goals and tried to minimize spend and maximize my savings.
- Keeping Up with Friends
Your friend just bought a new car or booked a big trip—it’s tempting to follow suit. But remember: you don’t know their financial situation. Build your lifestyle around your goals, not someone else’s Instagram feed.
I touched on this one earlier my closest friends were on the same page as me even though they technically had more means than I. Luckily there was no trap of keeping up with the Joneses on my end.
- Thinking “I’ll Worry About It Later”
The biggest mistake is assuming you have unlimited time to figure money out. Small habits—saving $100 a month, paying off your card, investing early—compound into massive advantages over the years.
As stated earlier I have always thought about money and have always had a plan. Worrying about it later is not in my vocabulary if anything I need to worry about things in the present less.
Wrap Up
All in all I think I did pretty well. You could argue either way on points 1,2 and 4. If I go with my 0.5 approach this means I made 1.5 out of a potential 10 mistakes. I can definitely live with that. More importantly I didn’t fall into anything major and in my late 20s and now well into my 30s I am in a great position. Could it be better sure and I am working towards it.
How did you do?
You can support me by:
- Subscribing to my YouTube Channel
- Using my WealthSimple referral link
- Simply continuing to read my weekly posts here.
Cheers ☕