Young and Broke

Too often I’m sitting around with one of my twenty-something year old friends sulking in their apartment. We complain about how we are constantly broke and can’t afford to experience life beyond the walls of their one bedroom abode.

Today, one of my friends and I decided to change it up a bit, and instead, sulk about our financial woes at a restaurant. As we sat there discussing how difficult it is working full time, going to school, and trying to save all at once, it caused me to consider the reasons why I’m struggling financially. In my first post, I talked about building good financial habits so they carry on into our 30’s and beyond, but how do we start building these habits? Before figuring out how to build good habits, I had to first identify what I’m doing wrong. Here are 6 financial mistakes I realize I’ve been making as a twenty-something.

Not saving 

This has to be the biggest one. I know so many friends living paycheck to paycheck, and when a financial emergency comes they’re stuck. If I’m really admitting it, I’ve been this person too many times and it’s because I have a poor habit of not saving. Creating a savings account is extremely important. Not only does it get you in the habit of saving now, but when an unforeseen circumstance pops up you’re prepared and not scrambling to figure out a way to find money fast. No matter what the amount is, try to put something in your savings account so that you can at least build the habit of saving.

Not living within my means 

I know how much I make and how much I should be spending, but I still find myself going out with my friends to eat, going on shopping trips, and paying $12.50 to see a movie I could be streaming on my couch at home. I’m not saying I shouldn’t ever go out and do things I enjoy doing with my friends, but if it’s not in the budget I shouldn’t be doing it. Which brings me to my next financial mistake…

Not creating a budget, or creating one but not sticking to it

I went to a financial literacy event at my university, and one of the tips the financial advisor gave was to create a physical budget, on paper, and to stick to it every month. As soon as I left the event, I went home and created a budget plan for myself, thinking it would make me into some new and improved twenty-something financial guru. I stuck to my budget for about a week  before I went right back to my old spending habits. A budget is great financial planning tool, but what good is a budget if you don’t stick to it?

Taking on debt and using it irresponsibly 

This is something I know a lot of my friends and I regret doing. If you’re taking out student  loans please use them for school! I can’t emphasize this enough. Remember this is money you will have to pay back. Use it for what it’s meant for rather than blowing it on food, clothes, and vacations.

Not investing in quality items 

When it came to buying clothes or any item I would always spring for cheap prices over spending a bit more for quality items. I quickly found out that cheap usually means poor quality. I had to constantly buy new things because the stuff I was buying would fall apart. So, the lesson here is if you can afford to spend money on quality items don’t be afraid to because they’ll last much longer. In the end you’ll actually save money because you won’t have to buy new things to replace the old ones.

Not putting money in a 401(k)

Before starting my current job, I had no idea what a 401(k) even was (if you don’t know what a 401(k) is click here to find out.) and I didn’t start putting money into it until some of my older friends told me how much they regretted not setting aside a percent of their earnings to go into their 401(k). If you’re a working twenty-something and have the option to have a 401(k) don’t be afraid to invest in it just because your check will be a bit smaller. It will be worth it in the future.

That being said, my goal is to eliminate these habits now so that I don’t continue them later. Before writing this post, I created a new updated budget and added money to my savings account. I plan on giving updates on what tips have helped me improve financially and things that simply aren’t working for me. Habits that are ingrained in you are difficult to break, but not impossible. We don’t have to be young and broke. What are some financial tips or habits you have?


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