10 Financial Mistakes I Made During Each Year Of My 20s (And What I Learned From Them)

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On TFD, we spend a lot of time discussing our financial mistakes and extracting every lesson we can learn from our past financial fumbles. At this point, we know that there are very few people who are immune to making financial mistakes because, unfortunately, learning how to manage your own finances comes with a few errors. But together, we’re all learning from each other’s mistakes and I know that I am slowly getting better with money. Last week, I set out to outline a financial mistake (and its corresponding lesson) for each year of our 20s. As I turned 24 a few months ago, I am very aware that while I’ve already had a few not-so-great financial missteps, I don’t have any frame of reference for the rest of the 20s. So, as a fun twist, I asked TFD contributors from ages 21 to 30 — and asked Chelsea and Lauren — about their financial mistakes as 20-somethings and what they learned. Here is one financial lesson from each year of the 20s:

On age 20:

“At 20, my biggest mistake was treating my jobs as a way to finance my lifestyle while in school, as opposed to a way to finance school. I took out loans for school, but I worked a lot and if I’d put money from each paycheck aside, I’d have a cushy savings account prepared for when I graduate this June. This taught me the value of putting money into my savings account regularly, and since realizing my mistake, I’ve started making monthly contributions to my savings account to grow my emergency fund. The most regrettable part is that I don’t even have a killer wardrobe or travel photos to show for the hard-earned money I spent. All I have is a lot of restaurant receipts encouraging me to ‘Tell Us How We Did.’ In 2016, I hope to have fewer restaurant receipts.”

Neya Abdi, currently 21

On age 21:

“For a long time, I was really bad (like, three months of reckless spending bad) about checking my bank account balances. I think the anxiety of having a low balance combined with my desire to just ‘be young’ and ‘make mistakes’ allowed me to hope I’d have enough money in my account to pay for meals out or buy a new pair of shoes. I realize now how absolutely dangerous this could have been for my credit score, and how much money I could have spent on overdraft fees. I recently signed up for text message balance notifications, which I receive once a week, as well as every time I make a large deposit or withdrawal. This has seriously helped me to understand and control my spending.”

— Alexis Willey, currently 22

On age 22:

“When I was 22, my worst mistake was raising the limit on my credit card. It might sound silly, but it gave me a false sense of reality about how much was too much to spend on my credit card. When my limit was $1,000, spending $700 seemed scary, so I wouldn’t spend too much on my card. But when I raised my credit limit to $5,000, spending $1,000 didn’t seem too bad, which is not the right mindset for me to have. I’ve learned the importance of only spending on your credit card when you feel confident that you can pay it off at the end of the month. I’m still learning to not even think about the raised limit on my card and to focus on not using it when I don’t need to. In the back of my mind, I remind myself that a balance of over $400 is going to be hard for me to pay off when my payment is due.”

Abby Stauffenger, currently 23

On age 23:

“My biggest problem in my early 20s — especially in college — is that I saved no money. Despite working four jobs in college and making a decent amount of money, I budgeted for the essentials (food, textbooks, rent) and blew the rest on stupid things like Forever 21 cropped tops as a ‘reward’ for being so responsible. One summer, while working an unpaid internship, I wound up almost completely out of money and ended up eating a lot of rice and beans to make ends meet. Honestly, age 23 was when I really took steps to remedy that behavior. Since starting my job, I’m very careful about auto-deducting 25% of my paycheck into a savings account. I never want to feel like I don’t have money to fall back on again.”

— Meghan Koushik, currently 24

On age 24:

“In my 24th year, my biggest mistake was not saving money when I started making more than I was used to. Instead of saving, I used the surplus to spend more and treated myself all the time. That made it much harder to leave my job when I hated it. Going forward, I want to save any money that’s left over after covering all of my expenses.”

Crissy Milazzo, currently 25

On age 25:

“At 25, I fell into the trap of overspending on clothes for every occasion that would pop up. If I went on vacation, I would feel like I needed to shop and buy all new stuff for my trip. For holiday parties and work events, I’d run out and get something fancy to make myself feel more confident. Now I get a rush out of borrowing items from friends and making them work with what I already own. I’ve switched focus, and I’ve stopped spending so much on material clothing items that I don’t truly love and aren’t evergreen. You wear them once for an event-specific occasion and then they just sit there, taking up space in my too-small closet. Finally, when I was 25, I never wanted to say ‘no’ to going out with friends to eat, even when I wasn’t very hungry or in the mood. The older I get, the more I focus on only going out when I feel like it’s worth it. I desire now, more than ever, to sit there and pay my portion of the check and think to myself ‘wow, that was really worth X dollars, and it was an experience worth paying for.'”

Lauren Ver Hage, currently 26

On age 26:

“I definitely learned this year that fast fashion is pretty much never worth it. I gave it up more or less cold turkey at the beginning of 2015, and now that I’m turning 27, I haven’t once regretted it. I have spent more up-front, but I buy less and cherish everything more, and I’m actually learning basic maintenance on investment items so that I can care for things they way they deserve to be. Properly treating leather is an art!”

Chelsea Fagan, currently 26

On age 27:

“I was so focused on moving into an apartment that was nicer than the one I had lived in from age 23-26 that I signed a lease for a new apartment that I could only afford because of the extra income I was making from freelance work. However, I became so busy with my full-time job, weddings, and traveling that slowly I stopped making as much. At age 27, I finally realized that you can’t — and you shouldn’t — spend money just because you have it. You should work on saving the extra money because not only do you need savings for life in general, but you never know when or if your financial situation is going to change.”

Samantha Matt, currently 27

On age 28:

“When I was 28, I joined a teaching residency program that required me to go through an unpaid summer training program before I’d start receiving my first paycheck in the fall. Instead of trying to save up my summer living expenses beforehand, I decided to bankroll it using my personal savings, figuring I’d be able to easily pay myself back once my salary kicked in. It quickly became obvious that teaching wasn’t for me, so I never made it to the end of the training program, and I’m still working on replenishing my savings. Lesson learned: Never make decisions based on money you think you’ll have in the future, because things don’t always go according to plan.”

Michelle Barrow, currently 29

On age 29:

“This is a mistake I continually make and was very aware of in my late 20s: I have too much stuff, whether it’s household possessions (like clothes, books, knickknacks, or kitchenware) or just packing too much in a suitcase. I always save things thinking I will use them and save money that way, but, more often than not, it results in a big hassle and costs more when I have to move it. We think we save money by holding onto things, but, unless you have a plan to put something to good use, you always save money and hassle by living and travelling light. Sometimes you have to learn to let go and be okay buying things as needed, instead of holding onto something on the off-chance you’ll use it in the future. I guess we could apply that lesson to more than just things around the house, too.”

Emma Bellamy, currently 30

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