Years from now, when I'm looking back on my 20s, I expect I'll wrap up everything that happened and file it under a section of my brain called "learning experience." It was a stretch of 10 years when I had more mistakes on my record than accomplishments. 

I graduated college with a major (poetry) that had no logical next step, I moved back home to my parents' house and stayed far too long, I blew my savings on moving to New York City for a job that paid minimum wage, and I never got comfortable with the word "budget." 

I also learned a lot of bad habits from the people around me. I had friends opening up credit cards on a weekly basis and maxing them out monthly, dipping into their retirement savings at age 25, and borrowing money from family members with no plans to pay them back. I worked at companies that were in the red, and they never paid their employees on time. 

But of all the financial mistakes I made in my 20s, these five were the biggest and will continue to cost me money for years to come. 


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1. Keeping my money in a savings account with a low-interest rate

I thought all savings accounts worked the same. You made money, then put some in a safe place until you needed it. While it sat there, it would grow a few dollars here and there because of interest. I was wrong. 

After a year of dating my now-fiancé, we opened up about our finances and I showed him that all of my money was in a savings account at a certain bank with a 0.03% interest rate. His mouth dropped and he began explaining to me that there are plenty of other banks with savings accounts that offer interest rates well over 1%. 

That means I could have been earning thousands of dollars more in interest every year than I was earning at the bank I had been loyal to for seven years. When I made the switch to a high-yield savings account, I went from earning a few hundred dollars a year in interest to making over three times that much.

If you don't know what the interest rate is for your current bank, give them a call. Ask if they can offer a higher interest rate and if they say no, research other banks that will. Some banks with the highest interest rates are online only, so if you're okay with not having a physical location to go to, you might want to make the switch. 

2. Never asking for a raise 

Before I started working for myself, I worked for four different companies in my 20s. While the jobs were all in different industries (from nonprofit PR to a tech startup) one thing remained the same — I never asked for a raise. 

According to Salary.com, the average yearly raise for employees is around 3.3%. There were some years I didn't receive a dollar more, even though I had perfect marks and outstanding comments on my annual review. My failure to negotiate a higher salary and to stand up for the value I brought to the companies I worked for cost me thousands of dollars every year. 

If negotiating your salary is a weak point for you, increase your knowledge on salary averages for your position and industry raise rates. Know that this data changes every year, so researching before you walk into the room will help you get paid the amount you deserve for the quality of work you provide.

3. Rolling my eyes at retirement

At the start of my 20s, I took on a very negative attitude toward planning for retirement. My theory was, why plan to retire when I can hardly pay my bills now? 

With a mindset like that, it took me years to even open a retirement account and a few more years to contribute the amount I should every month.

I started my first full-time job months after I graduated college at age 22 but didn't open up a 401(k) until I was 26. 

Those four years could have been a game changer to the health of my 401(k) considering my employer matched contributions, which meant for every dollar I put in, they'd match (up to a certain amount, of course). I missed out on thousands of dollars in my retirement fund because of a bad attitude

According to Investopedia, you should put 10% of your gross salary into a 401(k) to start. At the time, it would have been hard to do that and pay my bills, but I could have made it work if I was smarter about my money and stuck to a strict budget.

4. Busting all budgets

If you look in any notebook I have in my room or deep in the files on my computer, you'll find budgets that I started to put together but hardly ever stuck to. 

When life got busy, I turned a blind eye to my money situation — until my credit card bill was sent to me. I quickly began spending more than I could afford, and a lot of the purchases were things I could avoid if I had a strict budget and better time management.

For example, I noticed that 65% of items on my credit card were related to food. I could have reduced my monthly spending by planning ahead and either meal prepping or hunting for local restaurant discounts. 

Another big-ticket item on my credit card bill was rideshare costs, which could have been avoided in most cases. Taking a rideshare option was sometimes easier than riding the subway, but instead of costing $2.75 a ride, it cost me close to $20. 

I learned that without a budget, spending can go rogue and you won't even know how much damage you've done until you see your credit card statement or your bank calls you to let you know you overdrafted your checking account. 

Two things have helped me stay on track with my monthly spending. First, printing out credit card statements and thinking about how I could have avoided any of the charges and finding ways to plan ahead for the next month. 

Second, hiding my credit cards and using cash only for one month to track spending and cut down on unnecessary items. Both tricks have helped me stick to a budget and not spend upwards of $1,500 more than I need to every month.

5. Opening and closing credit cards

Early on in my 20s, it seemed like every time I went shopping a sales associate at the checkout counter would ask me the same question: "Do you want to open up a store card to save you 20%?" When my bill was already higher than I planned on spending in the first place, my answer was yes. 

Before I knew it, I had a lot of open credit cards — and a desire to close them all. I knew that opening credit cards could help my credit score, but only if I used them and paid them off immediately. But I wasn't aware that opening and closing them could hurt my score — and hurt it fast. I also made the mistake of closing cards I had a long history with, which made a huge dent in my credit score.

According to Credit Karma, closing a credit card won't impact your average age of accounts right away, but if you close a card that's older than your other cards, it could lower your average age of accounts after that initial period, which will lower your score. 

While this didn't directly cost me a lot of cash, It did hurt opportunities where having a higher credit score would have helped me save money (example: leasing a car or an apartment). 

Now that I'm in my 30s, I have vowed to never make these mistakes again. So far, I've worked on building on all of these lessons learned by meeting with a financial adviser, reading books on managing money, and learning from other people's mistakes, so I don't have to make any new ones this decade.


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Thomas J Cooper, CFP®, CPPT profile photo
Thomas J Cooper, CFP®, CPPT
Certified Financial Planner, Fiduciary
NAMCOA (Naples Asset Management Company®, LLC)
Mobile : 352-857-7273