5 Money Mistakes I See People Make in Their 20s

Your 20s are chaotic. You're figuring out careers, relationships, identity — and somewhere in the background, money decisions are being made (or avoided) that will echo for decades. The biggest financial mistakes in your 20s don't feel like mistakes when you're making them. They feel like normal life.

I've watched smart, capable people make the same handful of money moves that quietly set them back years — and most of them had no idea it was happening. Here are the five I see the most.

Not Investing Early Enough

This is the one that hurts the most, because you can never get the time back. Every year you wait to invest is compounding you'll never recover. Not reduced — gone.

People tell themselves they'll start investing when they make more money, when they understand the market better, when things "settle down." But the math doesn't care about your comfort level. A 25-year-old investing $150/month will likely outpace a 35-year-old investing $300/month — simply because of time.

You don't need to be an expert. You need to start. Even $50 a month into an index fund changes your trajectory — and yes, you can start investing with $100 or less. I wrote an entire guide on how to start investing in your 20s that walks you through it from zero.

Letting Lifestyle Inflation Eat Every Raise

You get a raise. You upgrade your apartment. You get a better job. You upgrade your car. Every income bump gets absorbed by a slightly nicer version of the life you already had — and your savings rate stays stuck at zero.

Lifestyle inflation is the silent killer of wealth building. It's not that you shouldn't enjoy your money. You absolutely should. But if 100% of every raise goes to living expenses, you're running on a treadmill that speeds up every time you do.

The move is simple: every time your income goes up, split the difference. Enjoy half, save or invest the other half. If you're not sure what percentage of your paycheck should be going to savings, this post breaks it down with actual numbers.

Having No Emergency Fund

Nobody posts about their emergency fund on social media. But here's what happens without one: every unexpected expense — a car repair, a medical bill, a sudden job loss — becomes debt. And that debt comes with interest. And that interest compounds against you.

An emergency fund isn't a savings goal. It's a debt prevention tool. It's the thing that keeps a $800 car problem from becoming a $2,000 credit card problem six months later.

You don't need six months of expenses saved to start feeling the benefit. Even $1,000 changes the math. If you're living paycheck to paycheck and think an emergency fund is impossible, I wrote this specifically for you.

Ignoring Debt Interest Rates

Not all debt is the same, and treating it that way costs people thousands. I see people making minimum payments on a 24% APR credit card while aggressively paying down a 5% car loan because the balance is higher. That's backwards.

The interest rate is what makes debt expensive, not the balance. High-interest debt — especially credit cards — compounds against you fast. A $5,000 credit card balance at 24% APR generates $1,200 in interest per year just for existing.

The fix is knowing your numbers:

• List every debt you have
• Write down the interest rate next to each one
• Attack the highest rate first (this is the avalanche method)

If you're stuck between paying off debt and saving, this post walks through exactly how to prioritize.

Waiting for the Perfect Plan Instead of Starting Imperfectly

This one is personal, because I've been guilty of it. You research the best budgeting method. You compare every brokerage. You read fourteen articles about Roth vs. Traditional IRAs. And then you do... nothing. Because you haven't found the perfect strategy.

Perfection is procrastination in a better outfit. The person who opens a brokerage account and invests $50 into a basic index fund today is miles ahead of the person who spends six months optimizing a plan they never execute.

Your first financial plan doesn't need to be perfect. It needs to exist. You can refine it later. You can optimize once you have momentum. But you cannot optimize zero.

The Real Cost of Waiting

Every mistake on this list has one thing in common: they're all versions of delay. Delaying investing. Delaying saving. Delaying getting serious about debt. Delaying action because conditions aren't ideal.

Your 20s are the decade where small, imperfect financial moves create the largest long-term payoff. You have time on your side — but only if you use it.

Stop waiting. Start building. Our free guides give you step-by-step frameworks to take action today — no perfection required.