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You know, the other day I was reminiscing about my 20s. Ah, the glory days, full of optimism, innocence, and sufficient collagen levels. When bouncing back from a late night out didn't involve a gallon of electrolytes and declining all other social activities for at least 14 days. - But I tell you what, I don't know about you, but I'm going to go to bed. - And back when, let's be real, we were all pretty much broke.
I mean, if your 20s were anything like mine, personal finance was kind of like roaming through a dark room with a minefield of Lego bricks scattered all over the floor. Awkward, often painful, and with a high chance of stumbling.
At least that was until I turned on that light and saw how bad I was with money and eventually course corrected. P-T-L. I-Y-K-Y-K. But when I think about it, it makes sense why so many of us struggle. Ages 20 through 29 are when a lot of people start earning a paycheck and being totally responsible for their finances for the first time in their life. And if you're over 26, start paying for your own health insurance. It's going to be painful. And there's going to be a copay to deal with that pain. I
When you're new to something, you're going to make mistakes. I mean, you should have heard me the first time I tried to pronounce charcuterie. I slaughtered it. Just absolutely slaughtered it.
So today we're looking at some of the most common financial mistakes people make in their 20s. And I'll kick it off with my own mistakes I regretfully made. Like making the office my entire personality. I guess I just wanted people to be afraid of how much they loved me. Asking my now wife out on a first date via Snapchat. Negative amounts of riz. Mean tweeting at Steve Martin. Some regret there, but also kind of a flex that Steve Martin tweeted at me. Minoring in philosophy.
Just too Nietzsche of a subject, you know? What was I gonna do with that? And lastly, not liking and subscribing to this channel. Granted, when I was in my 20s, this channel didn't exist, but still, don't make the same mistake I did. There's still hope for you. Like and subscribe to the channel while you still have a chance. You will not look back with a regret. All right, imagine this. You're moving into your college dorm with a heart full of hope and a backpack full of proactive spiral notebooks and student loans. ♪
Big money mistake of your 20s, number one, taking out student loans. You see, our teachers, parents, and guidance counselors thought they were giving us good advice when they said that taking out student loans would be worth it. And we believe them. And here we are. More than 45 million Americans have student loan debt keeping them from moving forward with their lives and doing big things like buying a home, starting a family, switching jobs, moving across the country, or joining a pickleball league. I actually quit my job today.
just to play more pickleball. Yeah, in about six weeks, I should be homeless. - And that's because the average student graduates with $38,000 in student loan debt, making the average monthly payment close to 400 bucks. And there's just not that much margin for having kids or smacking pickles when you've got that kind of debt hanging over your head. And I know what you're thinking.
"But George, that debt won't be around long. College will land me a good job eventually and I'll make so much money, it'll be paid off in no time." Well, I hate to break it to you, but that 38 grand probably won't go anywhere fast because a lot of 20-somethings are regretfully engaged in mistake number two, just making the minimum payments on debt. It's a tricky mistake, I know, because you think you're being responsible by simply making the payment you're supposed to make. But what you're not thinking about is that sneaky eight-letter word threatening to take your wealth potential captive.
No, not butterfly. That's nine letters. I'm talking about interest. I mean, take a look at this clip of this woman talking about her student loan balance. I just checked my student loans because I needed to get the information to someone. And I started with $80,000. I have been paying for 10 years. Last year, I paid $6,000 lump sum because that's really the only way to get it low. That took it down to $76,000.
six thousand after I've been paying for nine years. The grand total is I have paid one hundred and twenty thousand dollars and I still owe seventy six. I think I might be late to the game learning about this. Student loans are really messed up.
If you didn't catch that, she has paid $120,000 toward her student loans. But since it was just the minimum payment, her balance has only gotten paid down by $4,000. That's insane. So if you keep making just the minimum payments, the interest that's accruing can start to outgrow the actual money you're paying towards your loan. You got to think about this stuff. And this doesn't just happen with student loans. It happens with all kinds of debt. Your precious credit cards,
included. In fact, credit card APR hit an all-time high of over 20% this year, making it more expensive than ever to carry a balance month after month. Not to mention, research shows that most credit card users don't even know their credit card's APRs, meaning they also don't know just how bad they're getting screwed. Listen, you don't want to look up when you turn 30 and realize the debt you thought you've been paying off hasn't gone anywhere. You'll have other existential crises to deal with. Trust me.
- Oh my God, why? - And that's why if you have any debt at all, you need to pay it off with a vengeance as fast as possible so you can start growing your own wealth. And you do that by avoiding mistake number three, not having a budget.
I know, I know. At this stage, most people are embracing that whole young, wild, and free thing and rebel against anything that seems restrictive, like a budget or monogamous relationships. Yeah, I'm calling you guys out. Listen, Jeff, you're not into open relationships. You're just closed to commitment. All right, just say it, bro. Be honest with yourself. Sometimes I feel like I never really felt love, you know? So if that's your mindset, this is going to seem weird and backwards.
but a budget will actually give you more freedom with money. Why is that? Because it puts you back in the driver's seat of your finances and your life. When you know what you're dealing with financially, you can come up with a plan of attack to reach your goals, whether that's paying off debt, saving for retirement, or renting an Airbnb in Cancun with your Tuesday night trivia team.
I would choose Cabo personally, but you do you. Live mas. Now, if you're just getting started with this whole budgeting thing, it can be intimidating. That's why I made a whole video breaking it down and making it easy. And I will link to that budgeting for beginners video right below. Bottom line is that especially when you're young, not having a budget is just going to contribute to financial insecurity.
As will mistake number four, which is valuing spending over saving. And not to alarm you, but people in their 20s stand to lose the most by neglecting to save, especially when it comes to retirement. A delay even just by a few years while you're finding yourself on a houseboat in Norway could cost you hundreds of thousands of dollars. Don't believe me?
Let's walk through an example. Let's say you graduate debt-free from college and begin your first job making around $50,000 a year. Killer start. But instead of beginning to save for retirement, you decide to go YOLO and spend your income like someone without a fully formed prefrontal cortex, aka door dashing your daily Starbucks or buying a butt-tut of expensive audio equipment for a podcast on modern dating that you never start. And let me be honest with you, when your friends say you should start a podcast, they're
Thanks to Compound Interest.
But get this, if you'd started investing at 24 years old instead of 30 years old, you could have had over a million dollars in your retirement account. That means wasting those six years on oat milk mochas cost you over $400,000 in missed growth. Not to mention the extra dollar you paid for that oat milk every dang time. Was it worth it?
Yes, if you're dairy intolerant, it's very much worth it. I'm getting a stomach ache. Now listen, I know you want to have fun. I want you to have fun too. Even if these days fun looks like cozying up on the couch and watching back my ring doorbell footage. That's a new American pastime. But there's a balance between living for today and preparing for the important things of tomorrow, like retirement, a house down payment, and something crucial a lot of 20-somethings forget about. Which brings us to mistake number five.
not being prepared for taxes. Let's face it, thinking about taxes is not as enjoyable as getting lost in a YouTube hole about metal detecting. Taxes are intimidating, annoying, and frankly, one of the lame parts of being an adult. But they have to be done, especially if, you know, you wanna be a US citizen and all. And realizing you owe money to the IRS is one of the worst feelings in the world.
Right up there, we're seeing blue lights flashing in your rearview mirror or hearing your parents say, you can't share our Netflix account anymore. How could you do this to me? But when you're new to doing your taxes, not being prepared for them happens all the time. And there's a whole bunch of things that could affect your tax situation. Maybe your withholdings are off.
Maybe you didn't account for self-employment or side hustle income. Maybe you got married, lost your job at Foot Locker, got a new job at Journey's Kids, bought a house, had a baby, used your Journey's Kids discount to get those adorable little vans for the baby. And if you didn't account for these circumstances when you were paying taxes throughout the year, you might be unprepared to pay up come tax day. And that could throw a real wrench in your finances.
Whether you get a refund or you owe money, you still need to file your taxes legally. The IRS offers extensions or different types of payment plans you can opt for if you don't have the funds. And if you do owe the IRS money, make sure to put that at the very top of your debt payoff list. You want to make them happy first. Trust me, they can really screw up your life. And if you're new to this whole tax thing, I recommend letting a tax accountant show you the ropes.
You may even find that your situation is simple enough that you can handle it on your own using some tax software. But better to be safe than sorry if you're not confident. All right, this next mistake I talk about all the time on this channel, and while it's not financial, it sure does affect your finances. And that is caring too much about what other people think. Now, I'll be the first to admit that the struggle is real with this one.
I mean, when our social media feeds are littered with your peers and friends having big flashy parties and buying amazing homes and constantly summering at the Cape, it's natural to want to keep up and be a little jealous and then want to spend money to try to keep up. But listen, their captions don't say chasing sunsets and making memories that will last longer than my tan lines, but that won't last longer than the personal loan I took to pay for all of this. You
You don't see that part. You don't see the bills they have to pay to cover that vacation and to cover that car loan. In other words, your thriving friends are probably broke. I only have like $3.50, so it's hard. All right, so there's the six mistakes that people make in their 20s. And if you're sitting there thinking, wait,
Was I a financial mess in my 20s? Congratulations, you're officially an adult now. But hey, that also means you're just a little older and a little wiser. So let me know in the comments the biggest money mistake you made in your 20s. And remember, this is a safe place. This is the planet fitness of comment sections, a judgment-free zone. And if you wanna learn how to avoid even more mistakes a lot of people make when it comes to money and how to build wealth the right way, I talk all about this in my new book called Breaking Free From Broke, The Ultimate Guide to More Money,
and less stress. I'll drop a link below so you can check it out. Again, make sure to share this video with the youth in your life, like the marketing intern who for some reason refers to himself as CEO of the copy machine. As always, thanks for watching. We'll see you next time.
