5 Money Mistakes You'r Probably Making in Your 20's - And How to Fix Them
20’s is the most exciting time- new dreams, new job, earning, freedom and future goals. But during this time, we commit some financial mistakes which cause problems and regrets in future.
When we are young, money may not seem very important; but the truth is that the money habits you form in your 20’s are the ones you follow throughout your financial journey. In this era of market uncertainity, we definitely think about our finance.
In this blog we’ll talk about 5 common money mistakes you may be making without realizing it and how to fix them, so you can get off to a good start on your path to financial freedom.
🔴Mistake #1: Living Paycheck to Paycheck
Often people in their 20’s spend every month on salary, be it shopping, dining or credit cards. This pattern puts us in a dangerous cycle where we have no money for emergencies, no savings, no investment.
This means that if any emergency happens like health issue or job loss then we become completely dependent on credit cards or loans. And this is where the debt cycle begins.
✅ Fix Tip:
Track your expenses. You can use a simple notebook or mobile app. After getting salary every month, first save and then spend. (“Save First, Spend Later” Rule)
Create an emergency fund. Even if you have only ₹ 1000/month left, start it and make money.
Important Tip: Making an emergency fund may seem difficult, but one day it will come in handy.
🔴Mistake #2: Ignoring Budgeting
Many people believe that budget making is necessary only for those who have crores of rupees. But in reality, budget is necessary for every person who earns money whether it is ₹10,000 or ₹1 lakh.
When you don’t make a budget, you don’t know where your money is going. Subscription for web series, weekend outings, online shopping or anywhere else. Everyone is draining your account little by little.
✅ Fix Tip:
Create a simple monthly budget at the beginning of each month. Noting fixed expenses, urgent expenses and discretionary expenses. Use 50/30/20 rule:
50%: Zaroori cheesein (rent, bills, groceries)
30%: Personal wants (movies, outings, shopping)
20%: Savings and investments
You can use any apps like Mint, Goodbudget or Excel sheet.
🔴 Mistake #3: Relying Too Much on Credit Cards or Loans
Nowadays it has become very easy to get a credit card; One swipe and a little bit and a little is also available in EMI. But sometimes a financial trap is created when we cannot spend our thinking and society.
In our 20’s we often take loans or use credit cards for things like phones, branded clothes, trips and more.
Its interest is so high that we keep paying interest on only that money for years and the principal does not get exhausted.
✅ Fix Tip:
Use credit card only when you have full money available at that time. Minimum due giving means more interest. Understanding the difference between “Need” and “Want”. It is not right to take everything on loan. Track your credit score (CIBIL) and make it healthy by making timely repayments.
Keep emergency fund to not rely upon loans or creadit cards in case of urgency.
Important Tip: Credit card can be your friend, if you use it wisely. Otherwise it can destroy your financial life.
🔴Mistake #4: Not Investing Early
People in their 20’s often think – “Investment? Arre abhi toh main young hoon, 30 ke dekhte hain.” But this thinking misses a big opportunity, because there is no benefit of compounding.
If we start investing even ₹1,000 every month at the age of 25. Then that amount will be doubled if you start at 35. The biggest benefit of early investing is time. Keeping money in savings account is safe, but you will not get growth. We should always invest a little bit.
✅ Fix Tip:
Start with SIP (Systematic Investment Plan) – You can start investing from ₹500-₹1000 every month in mutual funds. Always keep a long-term view — don’t panic on short-term returns. For this you can invest in small cap SIP like – Nippon’s smallcap fund and SBI smallcap fund.
To manage the risk, you can refer basic personal finance or investing videos (YouTube, Groww , Zerodha Varsity etc.).
Important Tip: The earlier you invest, the less you will have to invest and the result will be higher.
🔴Mistake #5: Not Learning About Personal Finance
In school and college we are taught algebra and geometry, but no one teaches what is needed in real life – money management. Because of this, we are able to earn money in our 20s, but we are not able to manage it. What is the result? Tax burden, insurance confusion, tension over the name of mutual fund, and EMI hassles are what fans go through.
The biggest mistake we make is that we think: “Finance doesn’t make sense to me.” But in today’s digital age, gaining basic financial knowledge is as easy as watching YouTube.
✅ Fix Tip:
Watch a simple finance video (YouTube) or read a short article every month – MoneyAndPaisa.com.
Understand your basic needs: budgeting, insurance, tax, SIPs, credit score, etc. Some popular and easy-to-understand platforms:
YouTube: CA Rachana Phadke Ranade
Apps: Groww, Zerodha Coin etc.
Important Tip: The sooner you take financial literacy seriously, the sooner you can become financially free.
Conclusion
20’s is an age where the direction of life is set and finance decisions can make this direction stronger.
If you have made any of these 5 money mistakes – there is no need to worry. Everyone does it. The difference is visible when you do not correct your mistakes.
Making a little budget, investing a little, and learning a little about these little things can give you the power to have financial freedom and peace in your future.
It is important to earn money for yourself, but it is more important to use it wisely. So, start today.
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