5 Stupid Money Mistakes We Make In Our 20’s

So the entire reason that I started TFM was because so many of my friends were clueless about how to save money. We’re not taught the basics of managing personal finance in school, and most people aren’t raised by freakishly frugal parents like me. Unfortunately, this leads to some BIG stupid money mistakes we make in our 20’s that we end up having to pay for until we’re old farts.

1. Carrying credit card debt

I have friends who are so proud of themselves for having a savings account, yet are carrying a balance on a credit card that is charging 15% interest. Your savings account is definitely not making enough money to cover all that you’re paying to the credit card companies – so that money should be used to wipe out your debt. Paying the minimum amount due is  NOT Ok. It’s keeping you broke, and here’s why:

Average daily balance = $3,000 in credit card debt

Minimum payment = $60/month (assuming a 2% minimum payment requirement).

15% APR = interest that could cost you between $400 and $450 per year.

With a $60 minimum payment, $36 goes toward interest each month and $24 goes toward your $3,000 credit card balance. So after you send your first $60 payment to your $3,000 credit card bill, you will still owe $2,976 – this sucks.

What can you do?

* Call your credit card company and ask for a lower interest rate. It usually works.

* If you can pay off your debt within a year, transfer debt from a high interest card to one with a promotional 0% interest rate and pay it off before the offer expires and the rate increases. Find one here:

*If you have more than two cards, consider closing the newest ones or the ones with highest interest rates so as not to negatively affect your credit score.

 2. Never checking/asking for better deals

This is a rule that can be used in pretty much every aspect of your life. Your cell phone and cable providers should be called once a year to make sure you’re getting the best rates and taking advantage of current promotions. Use to make sure you’re getting the best health insurance rates. Use sites like Groupon and Living social and always use promo codes when buying online (here’s how: Why Promo Codes Get me Excited). Also always use online price comparison tools when shopping online to ensure you’re getting the best deal. When it comes to taxes, consider using free tax software applications. These are all habits that can add up to big savings – and surprisingly, very few people do them.

3. Not investing in retirement

I am ashamed to say that I only opened my IRA last year. As a freelancer, I don’t have the benefit of an employer set-up 401k, which a lot of crazy workers do not take advantage of. What’s even crazier is when people do not take advantage of employer matched contributions. This is FREE money, and should never be passed on. Actually, you should contribute as much as you can (aim to contribute 10-15% of your gross pay).

Starting in your 20’s means that you can make riskier investment choices, which generally means larger gains over time. Plus, you have the benefit of compound interest being accumulated over a longer period of time. Consider this:

Someone who puts $4,000 a year into retirement accounts starting at 22 can have $1 million by age 62, assuming 8% average annual returns. Wait 10 years to start contributing, and you’d have to put in more than twice as much — $8,800 a year — to reach the same goal.

If you are not eligable for a 401k, open an IRA. Read my guide here: Breaking down IRA’s.

4. Not having an emergency fund

If you are lucky enough to have paid off your debt, another stupid money mistake we make is to not have any sort of emergency fund. The rule of thumb is to have enough to cover three months of expenses. Consider having a portion of your paycheck automatically transfered to a savings account every week. It could be as little as $20 – but at least money is being put away without any thought or action necessary. Consider stashing it in an online bank that pays higher interest rates and no fees. Trust me, life can throw unexpected and expensive crappy things your way – and it’s important to be prepared.

5. Not knowing your credit score

Credit scores are the three-digit numbers lenders use to help gauge your creditworthiness, and they’re key to your financial life. You’ll pay higher interest rates and have more trouble getting loans if your scores are poor, and bad credit can cost you jobs, apartments and higher insurance premiums. Pay your bills on time, keep credit card balances low, and apply for credit sparingly to keep your scores in good shape. I reveal my credit score and further explain how to get yours in order with this handy article: Your Credit Score: Knowledge is money. You can check it free once a year on, or sign up with Creditkarma‘s app that will monitor and alert you of changes in your score.

If you’re reading this amazing blog, then I’m going to go ahead and assume that you’re smart. Don’t make one of these stupid money mistakes that you’ll regret when you’re old and wrinkly and can’t afford a decent facelift.



  1. Emmanuel Goldstein says:

    You can also check your credit on I am not affiliated with the company, but I thought I would suggest them as I was reading your article. These are some great simple tips, that could be applied to everyone.

  2. Wow! I called my credit card company to lower my interest rate and it worked! It was only like a 1-2% change but thats still lower then it was. Thanks for the advice.

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