Biggest Financial Mistakes People Make In Their 20s

It can be really fun to experience something for the first time that you've never really had before, like a disposable income.

For the average person, there isn't generally a lot of excess money to spend frivolously when they're a child, so when they hit their twenties and have their first "real" or "more important" job, they might find themselves in a position to enjoy some of the finer things in life.

But spending for fun can quickly go sideways, and people often look back at their 20s, wishing they'd managed their money differently.

Cringing in anticipation, Redditor WillieUwU asked:

"What's a financial mistake almost everyone makes in their 20s?"

Investing Early

"Not contributing to their job’s 401(k) or similar retirement plan because they want the extra money now."

- rellybellytoejelly

"Or like me, not understanding and thinking that ANY money invested in the market was risky, like gambling. I was perfectly fine with CDs with a guaranteed return, but the fact that I could potentially lose value was completely unacceptable. I wish I could smack some sense into my younger self."

- ReststrahlenEffect

A Fancy Ride

"Buying a car they can't really afford."

- banmebanme42

"For some reason, this is one of those mistakes that some people have to learn for themselves. Just this week, I read a post about someone asking if they could afford a luxury vehicle, and when they were unanimously told no by virtually everyone in the thread, their responses indicated that they were going to do it anyway."

- Several_Koala1106

Investing In Yourself

"When you’re in your early 20s, the most impactful thing you can do is 'invest' in is anything that will meaningfully increase your income in the long term. If you’re busting your a** in medical school, law school, MBA, early high-pressure careers, etc, spending money to keep yourself sane and comfortable is a better use of funds than investing a little into the market."

"You have the largest impact on your long-term earning potential during this time, so don’t get caught up in maxing returns. Focus on setting up your long-term career."

- cholulu_is_good

"This is great. I had a lot of FOMO during medical school because my friends from college would talk about saving for retirement and investment opportunities while I was racking up debt."

"One of them told me, 'If you were a stock, I'd buy as much as I could right now. You are investing in yourself.' That really changed my perspective."

- Chicken_Fajitas

Walking A Fine Line

"Not knowing the difference between being able to BUY something and being able to AFFORD something."

- MrWhatsItTouya

"Also, just because you can afford it, doesn’t mean you need it."

- dave8910

"Honestly, and budgeting is so easy now with apps that link directly to your accounts. Allowing you to see what what’s for saving/investing, what’s for regular bills and what’s left for nice things."

"But it’s, to be fair, for people in their 20s, so easy for peer pressure and fear of missing out to completely overwhelm that sense."

- Top-Spinach-9832

Dining Experience

"Eating out. It quickly adds up, especially the drinks and the coffee, and it’s the easiest expense to lose track of because the individual amounts are so small."

- wathappen

"It's really delivery apps that are a waste. Just pick up the food yourself! Using the app itself for pick-up is great since there are often rewards or offers online for like buy-one-get-one-free."

"I've often gotten two or three meals worth of food for less than 15 bucks with BOGO when I was in a pinch working late shifts."

"Yes, it adds up, but you also need to eat, and for some cases the expense is worth it if you don't have the time or have a really hectic week ahead of you."

- Jake_FromStateFarm27

Overpriced Vehicles

"Buying an overpriced car with a terrible interest rate. Young adults go out and buy a BMW or a loaded lifted truck and don’t realize the increased costs of insurance, yearly registration, gas (some luxury only take premium), maintenance, tires, minor mechanical fixes, etc."

"It’s all fun and games driving that BMW 3 Series off the lot until you need a new tire, and it’s $500 for just one. A set of four new tires could easily run you $2000 dollars if you don’t do any research."

- pwa09

"I had quite a few friends who fell into this trap. I knew how much they were making, how much wealth they had in general. No way did they have any business buying or leasing the cars they did."

"But they felt like they were somehow entitled to a new Beamer or Truck, and mixed in an unhealthy amount of mathematical ignorance, any sixth grader could figure as a bad idea. Those friends are now 10 years behind others who saved and are having to make bigger life choices based on mistakes of their past."

- fulthrottlejazzhands

Job Problems

"Getting a Master's degree in an obsolete and useless field, and leaving a job without another job lined up."

- DeceptiveFacade83

"I feel personally attacked."

- NothingVerySpecific

It All Adds Up

"Opening a credit card and charging more than they can afford."

"Not saving an emergency fund."

"Not starting to invest a portion of their paycheck."

- Ok-Computer1234567

Financial Abuse

"Financially supporting a boyfriend who wants to stay home and play video games all day."

- Significant_Potato29

Now, Not Later

"Thinking you’ll start saving 'later.' Most of us in our 20s underestimate how fast time (and expenses) catch up."

- Other_Wolverine_2197

Investing In Solid Relationships

"Not traveling, then assuming how they live is the best/only way."

"Not knowing how to properly use credit."

"Taking love too seriously. You've got time. It's better to wait and be sure you've got the right fit than to marry someone who turns out to be a jerk."

"Make sure you've seen them disappointed, that you know how to resolve a fight, that you agree on how to use money and raise kids (if you want them), how they respond when you tell them no/set boundaries, and make sure you've known them at least a year or two before you even contemplate marrying them."

"Also, make sure they're a fully functional adult and with expectations that you be their personal servant/surrogate parent. It's better if they've lived away from their parents first."

"I'm grateful every day I didn't marry the first guy I was engaged to. It turned out he was hiding anger issues and couldn't function without his parents."

- BookLuvrr7

The Walk-In Closet

"Women: Buying lots and lots of clothes. I didn't do this, but I have seen lots of women in their 20s do this. I do not frown upon it, though, because for many women, their 20s are going to be the best bodies they have in their lives."

"That is a sad reality of genetics, stress eating, aging, maybe having a baby or two, gravity, etc. So enjoy dressing nicely when you have the shape to wear the nice clothes."

"HOWEVER, if young women learned how to build a wardrobe based on some basic pieces, they could still look nice but have clothes that don't go out of style. What sinks ladies' wallets is following the clothing trends."

"That is what people do in their 20s in many areas of life. Clothing makers and marketers know this very well about young adults, and they always bombard you with messages to buy more, buy new, buy now!"

"That is something we really need to teach people in high school: how everyone really IS after your money once you become independent and make all your own choices."

- TroubledTimesBesetUs

Spending Ratio

"Not making a budget or financial plan."

"A ratio of 50/30/20 is an easy one to follow for most people. 50 percent of your income at most goes to needs and bills. 30 percent goes towards wants and fun. 20 percent goes towards savings and investments."

"I follow something more like 20/30/50, but that’s because I’ve been living on a good budget for all of my 20s. I’ll be 30 next year with a great investment portfolio."

- gains_and_brains

Paycheck To Paycheck

"Having fun with their money, getting married and having kids early, and not establishing an educational degree and career in the meantime... forcing them to live paycheck to paycheck, possibly for the rest of their lives."

- Least-Quail216

Striking A Balance

"I spent my 20s spending all my money, playing music, and travelling to play shows. While I had a great time, I saved zero dollars, and now I'm 35 and feel like I'm 10 years behind financially."

"So I'd say, enjoy your 20s and have a great time, but put at least a little bit away in an account that you don't touch."

"Also, if you get a chance to travel Australia with your mates, then definitely do it."

- NotBradPitt90

Financial management and financial awareness come with age and experience for most people, and while it's easy to look back and cringe over our decisions, the important thing to remember is that it's never too late to start following a budget, spending more wisely, and saving some money.

While our twenties may have been the best time to start saving or investing, it's better to start today than to never do it at all.