The Financial Mistakes 20-Somethings Are Most Likely To Make

When you’re in your 20s, you’re likely to become financially independent for the first time in your life. No matter if you’re 21 or 27, this is the decade where you start to make the big financial decisions - some of which set the tone for the rest of your life. 

Now, we don’t say that to scare you! But it does tend to be a fact; when you’re earning your own money and have the final say on where it goes, you can get it wrong! And you might just end up with an empty wallet and no idea how to fill it up again. 

As such, here are the spending traps 20-somethings should watch out for. 

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Living without a Budget

You’re so much more likely to ‘live above your means’ when you have no real clue what your means are. 

Living without a budget makes it very difficult to stay on top of your finances, and the irony is that you don’t really feel like you need one until you’re ‘settled down’ and have responsibilities to fork out for.

Get the practice in now - it’ll give you a better financial safety net in a few years’ time! Get a budget together to have it all in one place, where you can quickly track and amend the amount of disposable income you’ve got left over for the month.

Taking Out a Bad Interest Loan

A lot of 20-somethings fall into the trap of taking out a loan that doesn’t really work. Whether it’s because loan terms and repayments are still a bit of a confusing topic, or simply because you’re less likely to care about what happens next, bad interest loans litter the young adulthood landscape! 

But you don’t have to be the world’s best financial expert in your 20s to avoid having to make a pcp claim on a bad car purchase. Getting to know the basics is well worth your time and effort, and a quick Google of any financial jargon you don’t understand will usually tell you everything you need to know. 

The main thing to remember is FOMO. You’re young, you’re free, you want to try everything - and you’ve probably got a friend group there to pull you into making these choices with you. If you can’t afford something, don’t let a loan take advantage!

Not Starting to Save

It’s so common to see someone under 30 have next to no savings in the bank - and no plan for saving for the future either. 

Many people don’t have pensions set up until they’re well past the age of 29, but the earlier you’re paying into a pension pot, the more money you have for later on in life.

Jump at the chance while you’ve got it, but it’s OK if you’ve missed that chance thus far. As they say, the second best time is today!

When you’re in your 20s, your finances often seem less scary. But time can quickly catch up!