The wild and roaring twenties is a very critical period in our lives. This period is marked by testing freedom, exciting opportunities, making new friends, and financial independence. As we transition from adolescence to adulthood, getting caught in the thrill of living in the moment is normal. 

However, our choices during this period can have a lasting impact on our finances. Due to wrong choices, many young adults unknowingly set themselves up for challenges down the road. To avoid struggling later in life, young adults need to know inevitable money mistakes and how these mistakes can mar their future. 

This article uncovers top money mistakes and is a guide for everyone who is seeking to navigate life in their 20s. 

5 Money Mistakes To Avoid in your 20s

Here are five money mistakes to avoid in your 20s: 

1. Not Budgeting:

Your 20s are your accumulation phase, and you want to build as much wealth as possible. If your dream is to retire, travel around the world, and enjoy life with your significant other by 40, not budgeting your finances is the dream killer you should run from. 

It is essential to prioritize budgeting your finances this early, as it is a skill that sticks and comes in handy later in life. Budgeting helps you manage your finances properly. It also enables you to identify bad financial habits before they accumulate. Click here to learn how to create a realistic budget. 

2. Living Beyond Your Means:

Being in your 20s has a nice feel to it. You graduated from college recently, have an excellent paying job, and have little expenses — at least, not the type that involves managing kids and a household. You make a decent amount of money and have a slight change that can bring out your fun-loving and explorative side.

While we are not against having fun in your 20s, you’ll slip into the pit of living beyond your means if you’re not prudent. Living beyond your means can involve living paycheck to paycheck without leaving room for savings or investment. This is particularly bad for the financial freedom you crave in your 20s. 

An X user. 

Are you living beyond your means? Now is the time to track your previous expenses. Identifying when you unnecessarily spend money is the first step to living within your means. Also, the checklist below can help you identify if you’re living within or beyond your means. 

📝Do you practice impulse buying?

📝Do you struggle to decline requests for help when you’re financially drained?

📝Do you spend more than you earn monthly? 

📝Are you pressurized with the need to meet up with the lifestyle of others?

If your answers to these questions are yes, you must step back. Don’t buy that bag because your favorite influencer on IG uses it. Ask yourself if you need anything before purchasing it. Also, break free from the choke of black tax — don’t get me wrong. Give, but learn to say NO when it’s inconvenient. 

3. Not having an emergency Fund:

Unless you’re a trust fund baby, not having an emergency fund is one of the biggest financial mistakes to avoid in your 20s. An emergency fund is money set aside from one’s income regularly to bridge the gap during unforeseen circumstances. It is more like backup money to tackle emergencies like medical expenses, job loss, car repairs, etc. 

While we do not want to record any loss, it’s important to note that life can happen anytime. Having an emergency fund helps you handle whatever life throws at you. An emergency fund helps you navigate that challenging phase without worrying about the bills. It’s like a safety net that protects you from life. 

To start an emergency fund, you must set aside a percentage of your income. Once you have that stipulated percentage, make sure you put it in a secure wallet and be consistent. Aim to save a tangible amount of money that can easily cover an emergency. 

It is important to note that your emergency fund is not your savings and should not be touched except during emergencies. 

4. Accumulating Debts:

Another financial mistake to avoid in your 20s is to accumulate debt. Your 20s are supposed to be your building phase, so accumulated debts should be avoided at all costs.

 Yeah, loan apps can be very convincing. They’ll offer to lend you a minimal amount of money that accumulates to something burdensome over a period of time. A friend of mine borrowed ₦30000 from a loan app, and it accumulated to over ₦200000 over a period of time. 

Debts are not what you should build as a young adult seeking a stable financial life. Too much debt negates the essence of saving and puts a heavy strain on your budget. 

5. Not Setting Saving Goals:

Savings goals are building blocks that lay the foundation of the financial future every young adult dreams of. According to Ford, “What your future self really wants—and needs—is more money.” Without clear savings goals, it’s easy to drift through life, spending without purpose and missing out on important opportunities. This can lead to financial stress and a cycle of living paycheck to paycheck. 

Setting specific savings goals transforms vague aspirations into actionable plans. For example, if you dream of traveling or buying a home, saving a certain amount each month makes those dreams attainable. Even small contributions can accumulate over time, making a significant impact. 

Conclusion 

Your 20s are a crucial phase of your life. The financial choices you make will be a huge determinant of how the rest of your life will go. Remember, you only live once. Spend this life living and living WELL. Fleeing from these five mistakes will ensure that you get the most out of your twenties. 

You got this! And I’m sincerely rooting for you.