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4 Big Mistakes of My 20s That Affected My Net Worth

What if? We all ask that at some point, maybe even about your net worth. It’s a reflective question, focused on things that have happened in the past. What could have resulted if the events or actions in our rear view mirror had proceeded in a different fashion?

net worth

In the absence of a Back to the Future time machine, we can’t change what has happened or that we did things the wrong way. So it does little good to dwell on it. That really only leads to regret.

However, the past does serve a big purpose. The past is the best teacher for our future. The victories we achieved and the mistakes we endured should help us make thoughtful and wise decisions going forward.

We make mistakes all the time but more so in our youth. This happens for many reasons but mostly because we lack experience. In our youth, we also have a difficult time envisioning the future and have a limited sense of our own vulnerability. Arrogance, self-promotion and a live-for-the-moment mentality are all more characteristic of the young than they are of the old.

As I reflect on the decade of my 20s I see many mistakes in all facets of life. These are the four that set me back financially and contributed negatively to the growth of my net worth.

Discontinuing Skill Development

All I could see after four years of high school, four years of college and three plus years of graduate work was that the end of school had come. I was sick of school and was done with learning. My only ambition was to settle into a job and start earning money.

I think many can relate to that. You work so hard to get through school and finally reach that career goal. When that happens, it feels like the weight of the world has been lifted off your shoulders. You’ve finally arrived and achieved what you set out to do. And it’s at this point that significant danger occurs.

What is that danger? You cease to stop learning and growing.

Oh, you may learn more about your specific field as you gain experience in your job but other beneficial things fall by the wayside.

For me, I quit reading. I had done enough of that in school. Consequently, I didn’t expose myself to personal growth books that would have contributed to my understanding of leadership, management, communication and people skills. All of those things would have directly facilitated growth in my career.

Growth in your career contributes to your net worth. When you grow more (i.e. get a promotion or grow your company) you make more money. And the sooner you can move forward and make more money in your career the better.

But you can’t move forward unless you continue to develop your skills. Failing to do so will leave you stagnant.

Neglecting Budgeting Impacts Net Worth

When that first real money came in my 20s with my first real job it was as if I’d died and gone to heaven. It was a great feeling holding that first big paycheck in my hands. And all I wanted to do was spend it all.

Of course I didn’t because there were bills to pay and gas to put in the car. Thanks to my wife for pointing those issues out.

But what I failed to do was account for where all my money was going. I knew there were monthly financial obligations (i.e. bills, necessities) that my paycheck would cover. Beyond that I didn’t care. I spent everything else on whatever I wanted.

The problem was that I often spent beyond my means. My wife and I would run up our credit card bill without thought of the consequences.  We kept telling ourselves we’d “pay if off somehow” or “do better next month.” But the situation never improved.

Had we understood then the value of budgeting money we would have spent a lot less and saved a lot more. That’s what we realized when we got our heads on straight and started monthly budgeting in our 30s. The spending discipline we should have had in our 20s would have allowed us to save and invest more, once again contributing to our net worth.

What we have since realized, is that putting together a successful budget and sticking to it is the #1 tool for young people to grow their net worth. I wish we had started earlier.

Related Content: The Ultimate Guide On How to Make the Best Monthly Budget

Living for the Moment vs. Retirement

I mentioned that it’s difficult for teens and 20-somethings to project into the future. I certainly couldn’t. All I could see were the trees right in front of me. I completed neglected the forest (i.e. the big picture).

So when it came time to purchase our second house in our late 20s, we decided upon a real fancy way to help fund our down payment – cash out my wife’s retirement plan from the public school teaching job she’d had for five years before leaving to stay home with our kids.

After taking the tax penalty hit we received just about $5,000. We combined that with some other money to put down just over 20%. We thought we’d made a wise move because my wife was never going to work in the public school system again and we had a more pressing need in the moment for which the money could be used.


There were other ways we could have raised the $5,000. We could have sold some of our stuff or worked a second job for short time. We could have cashed out money from our mutual funds, which would have resulted in less of a tax hit. As a last resort, we could have just borrowed a little more on our mortgage.

We should have kept that money in a retirement fund and rolled it over into something we could manage. Had we done so and put the full amount ($5000 + the taxes we paid to cash it out) into the Vanguard 500 Index Fund for example, it would have grown to over $30,000 today.

There was no substantial benefit from cashing out her plan. We could have managed our mortgage regardless. We simply were choosing to focus on the moment instead of thinking about the ramifications for our future net worth.

Trying to Speed Rush Investing

The final financial mistake of my 20s is that I succumbed to the most basic of human temptations when it comes to money – trying to get rich quick.

What money I was using at the time to invest was going into short-term stock plays that I hoped would reap a quick return. Mostly I was trading individual stocks and buying call or put options. I hoped to catch a trend and sell my positions for quick money.

I once even participated in the ultimate risky endeavor – putting down $1,000 to buy stock in a start up company. That didn’t go so well.

Related Content: High Risk Investing: When I Turned $1,000 Into…

There may be people who can make quick money in the market. I was not one of them.

I’ve come to learn that investing is a long-term process that requires patience, discipline and emotional maturity. It is to be played with consistent focus over many, many years. If done so, it’s almost a guarantee that you will win with money and increase your net worth. Fortunately, I learned that lesson in my early 30s so I minimized the damage to some extent.

I lost a lot of money in my 20s trying to speed up investing. Had I to do it over, I would have turned and ran when I saw those get-rich-quick ideas float across my path.

Be Wise in Your 20s or Your Net Worth Suffers

There is nothing wrong with being a 20-something. I loved that decade of my life. A new life with my wife, travels, new careers and the beginning of our child rearing days all occurred then. I wouldn’t trade those times for anything. They were special.

I just wish I’d known more, been more disciplined and been aware of the tools I could use to do the right things. It would have made for an even better decade.

If you are in your 20s you have so much more available to you now than I did in that stage of my life. There are so many online resources to track your net worth. I’ve found monitoring my net worth has kept me motivated and helped me stay the course. So take advantage of the tools out there.

That way you will be more knowledgeable and won’t make financial mistakes that set back your future.

Leave a Comment or Answer a Question Below: What financial mistakes from your 20s do you regret? If you are in your 20s right now what are you struggling with? What else would you say to someone in their 20s who is looking to get ahead and increase their net worth? 

Image courtesy of NeONBRAND on Unsplash

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  1. My biggest regret is not investing sooner! I spent a lot of time worried about stuffing it up and not knowing if what I was doing was right, which held me back for a long time. Just starting is the most important thing.

    • I think many of us have that regret Captain. I was simply never exposed to it growing up so had no clue that it was important to get started early. Thankfully, I didn’t wait to long and have now seen the benefits of growth over time.

  2. I would say the biggest lesson learned from my 20’s is really learning the value of money spent. When you receive a check from work, you owe income tax. Then when you go and buy something, you owe sales tax. This means that $6 sandwich actually costs a lot more than $6. If you minimize the spending and keep that money growing tax deferred, that will have a huge impact on your bottom line.

  3. I’m in my 20’s right now and I am learning an incredible amount from people who are open to sharing their experiences about what they wish they had known. My struggle right now is that I have all my systems set in place (i.e. retirement funding, emergency fund, short term goals, etc.), but recognize that my mindset may change in 10 years. Envisioning the future of retirement and all that may change along the path to get there is definitely challenging. One of my overarching goals is to continue to invest in the background and make my money work so I can spend more time on the things I value with the people I love!

  4. Now that I am officially an old sage (in the latter half of my twenties), I can officially say that the biggest money mistake that I made was not believing that my career ambitions (and therefore income earning potential) might completely change when I had kids. It turns out that being a stay at home mom is actually more appealing than corporate jet setting, but we are set up so that I will continue work until my husband completes his degree.

    Working is not bad, and I can’t guarantee that we would have made a different decision had I understood the implications better, but I wish I had gone in as a bit more of a head’s up player.

  5. I definitely wish I had started my retirement planning earlier. But I think my bigger mistake was not really focusing on what I wanted to do for a living. In college I majored in history thinking I would go into teaching, but the jobs weren’t there at the time. Instead of paying my dues to pursue my other passions, I just kind of fell into retail management and spent a very long time there. I think those who know what they want to do early on, and focus on that with their education, end up with the most successful careers.

  6. Dane Hinson says

    I certainly can relate to many of these mistakes. Especially “speed rushing” investing. I remember opening that first brokerage account and setting up my portfolio with individual stock picks. I thought I was going to be the next great thing in investment management. Now a decade later my portfolio is balanced and diversified in index funds. It’s not always sexy, but it will get the job done.

  7. Becoming a financial advisor helped prevent me from making those mistakes, which I am very grateful for. When I initially graduated, like you, I thought most of my “learning” days were behind me. But when I became a financial advisor, I realized how wrong that thinking was. 🙂 And it was a good lesson to learn because we should always be learning, even if it’s not in our professional lives.

    • I would have gone into finance for college had I known how much I would eventually like it. Don’t think I’m going to turn back the clock now though and head back to school.

  8. You did investing with calls and puts? Wow, you really were taking some risks!

    I did something very similar where I invested money in a bankrupt company thinking “for sure” they would bounce back out of bankruptcy and I would become very rich. Instead what I got was a very real life lesson that boring is beautiful when it comes to investing.

    • “…calls and puts…” I know…it’s ridiculous. Read and few books and see others have success and you believe you can too. I’m sure it has it’s place for professionals but I never could make it work.

  9. I didn’t always make the best financial decisions either, but at least I discovered PF blogs and have learned the error of my ways (mostly) at age 23. Now I’m on the right track 🙂

  10. I never had a plan at all with my money in my 20’s. This is where the debt accumulation started for me. I thought it was okay to use credit cards to pay for things I didn’t have cash for. If you can get off to a good start managing your money with a plan from the beginning you’ll set yourself up for incredible success.

    • We are right on the same page Brian. Credit cards enhanced my lack of discipline and led me to overspend. We’d be in an entirely different place right now (better place) if I would have shred those up at 25.

  11. When think back to my early twenties, I am shocked by how much I would spend on frivolous things without a second thought. I would spend a night at the bar with my friends and just withdraw money as I needed it (from one of the white label ATMs that charges an arm and a leg) and then I would take a $30 cab ride home. Now, I am careful with my subway tokens…do I really need to use one or can I walk/bike. Seems so crazy now 🙂

    • “…without a second thought.” Again, a typical tendency of youth that I can relate to. We are so prone to go with our first instinct and many, many times we should pause and reflect on what it is we are about to do. Ask questions like “What will be the consequences of this action?”, “Will I regret this?”, “Is there another alternative?” and “Does this line up with my goals?”

  12. One HUGE regret in my twenties: going to law school. (I don’t even think I need to say any more than that!) 🙂

    • Added schooling is a great danger, especially when it doesn’t lead to anything. I’m convinced some people just keep going to school because they a) can’t find a job, b) are confused about their careers or c) have been in school so long they don’t know anything else.

  13. I think not saving for retirement and getting my spending under control were my worst mistakes. I was too busy buying a fancy car & going out!

  14. I can relate to a few of these Brian and, really, the big mistake I made in my 20s largely came down to my debt. I learned invaluable lessons through it that I still use today, though it set me back at the time several years by denying how big it was and then to actually pay it off. What I’d tell someone now is to not stop learning and to make money work for you – to use it as a tool…regardless of the amount you’re working with.

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