You're constantly told, these are the best years of your life, but what the heck are we supposed to be doing? The truth is that everyone in their twenties is making it up. We're all just faking it until we make it.. and that comes with making some huge mistakes in the process. Making mistakes is how we learn so it's important we use this time in our twenties to really fuck it up, make money mistakes, and sort it out as soon as we can!
Until March 2020 I was riding solo. I lived life without a budget. Payday hit, I paid my rent to my dodgy London landlord, and I guarantee takeaway was on the cards that night! My money technique was basically 'yolo', just enjoy yourself and one day your money problems will sort themselves out. At this point in my life, if I wasn't putting end of the month groceries on my credit card, it was because the card maxed already maxed out... oh and I never paid off the full amount. Only ever minimums.
Having a budget earlier into my twenties would have helped me so much! But I thought them restrictive and for those with serious money problems.. and there I was with too much month for my money thinking that I was better that budgeters. Hilarious! Having and following a budget puts you in charge, and you know exactly where your money is going, instead of wondering where the heck it all went!
Why not download my super simple budget planner for £1!
Trying To Keep Up
In my early twenties, one of my biggest money mistakes was trying to keep up with my peers. If you've read the story of how I got into debt, "Money Can't Buy You Happiness" you'll know that I went into a career in theatre. One of the cultural staples of being with the theatre industry is drinking. If I was to average it out, I could safely say I went to our 'private member arts club' 6/7 night a week over the duration I lived in London. And that equals A LOT of money on alcohol over the years! But it was the 'done' thing.
If you've recently watched It's A Sin on Channel 4, you'll have noticed the amount they end up at gay clubs, bars and house parties.. and this was basically my life (I got some awful flashbacks when they kept going back to Heaven).
Sometimes I think back to the damage this has done to my bank balance over the years, and god knows what it did to my health! But I was simply trying to keep up with my friends and peers. Would I still have the friends I do now if I cut the amount I went drinking with them by 50%.. I reckon so. I know they have friends who didn't join us half as often, and I do too.
The moment I was old enough to get my own phone contract and I got myself a summer job and BOOM, the latest iPhone arrived! Yup, since 2015 I have always had the latest iPhone and upgraded as early as I could. My most recent phone contract cost me £59 a month! I spent my student maintenance grants on a Macbook Pro, and would regularly spend my pay checks on something that would give me the outward appearance of 'doing well'. In my opinion this is probably one of the most common money mistakes.
I grew up in poverty and always heard "When you're older you can buy what you want" whenever I was told 'no' as we were unable to afford it. So I took this into my adult life and ran with it. I had money now, so I could afford nice things and basically have whatever I wanted. So I did.
And because of this I never amounted any savings. My fixed expenses were ridiculously high as I tried affording all the latest gadgets on contracts. Who knows how much I could have saved if I wasn't trying to show off.
Not Having a Money Goal
Some money mistakes take a little while to grow out of or shift behaviour pattern, but this one is super simple to change. I used to hate looking into the future, and dreaded the question "where do you see yourself in five years time" because I just did not know.. or care! In my early twenties I was too busy enjoying the now. My goal for life was simply to enjoy myself, and not consider any consequences of my actions.
Growing up in poverty and then moving to London, I was surrounded with this idea that I would never own a property. It's just too expensive, you need the bank of mum and dad, and you cannot buy in London. So I threw the idea away. It was simply never going to happen, and as I was making all the mistakes above, I never had any cash left to even consider saving towards a goal.
But do it. Think about where you REALLY want your life to be in five years time and think what steps you need to take in order to make it happen. Take a look at 5 Budgeting Methods and How They Can Help You Reach Your Money Goals and start working towards it. The earlier the better!
On the topic 'the earlier the better', one of the number one things I regret, and any investor will tell you the same.. is that they did not start soon enough. Now when you're 20 and having a fab night out at Spoons before you hit All Bar One, investing is definitely not at the forefront of your mind, however because of the wonders that is compound interest, the sooner you get your head in the game, the better!
I only started investing in 2020 and am currently investing very small amounts while working towards my short term goal of buying a three bed terraced house up North (not earlier I thought it wasn't possible and now it's a 'short term goal'.. oh how times have changed!) but I've started.
Compound interest is simply earning interest, on your interest. The idea is that once you have an investment portfolio set up, any money you received from interest or dividends, gets re-invested into your portfolio rather than withdrawn as passive income, and the next interest payment will be larger because of the higher amount in your portfolio, and so on and so forth. A good example of compound interest is the 'Penny Doubled Everyday Question' - Would you rather have £1m now, or have 1p doubled every day for a month? Having £1m right now would be absolutely fantastic in my opinion, but if you stop to work out what 1p doubled every day for month would be, you'd actually end up with over £5m. Leaving your money to grown on it's own can lead to surprising results in the long term, and it's why investing is used for retirement funds and pensions.
Want to start investing but don't have a clue? I always recommend starting with platforms that offer 'Free Shares' meaning you can utilise the free money and play around with the platform, and learn in your own time. Why not read, "How Do Free Share Offers Work?"
What money mistakes have you made?