Financial Mistakes to Avoid in Your 20’s and 30’s

Your 20s and 30s are exciting years filled with career growth, personal milestones and newfound independence. But they’re also crucial decades for building a strong financial foundation. Unfortunately, mistakes made during these years can follow you for much longer than expected. I know this firsthand.

My Costly Mortgage Mistake

In my late 20s, I was struggling to make ends meet. I had purchased my first home, a condo, but found myself in a single-income situation unexpectedly. Because of this, plus a car loan payment and mounting credit card debt, I was financially stretched thin. One month, I made the unwise decision to skip my mortgage payment. I figured I’d make it up the next month and everything would be fine.

And technically, I did catch up. But years later, when I was ready to change careers and had an exciting new job offer, that missed payment showed up on my background check. Even though I had made it up, it still lingered on my financial record. I had to explain to my potential employer why I had fallen behind, and I was lucky that they gave me a chance. But it was a stressful moment that could have been avoided with better financial planning.

That experience taught me a hard but valuable lesson: Short-term financial decisions can have long-term consequences. To help you avoid similar pitfalls, here are some key financial mistakes to watch out for in your 20s and 30s.

• Living Without an Emergency Fund

  Unexpected expenses happen—whether it’s a medical bill, car repair or job loss. Without an emergency fund, you may find yourself borrowing money at high interest rates or, like me, making financial choices that haunt you later. Aim to save at least three to six months’ worth of expenses in an easily accessible account.
   

•  Neglecting Your Credit Score

  Your credit score impacts more than just loan approvals—it can affect job opportunities, apartment rentals and even insurance rates. Missing a mortgage payment or maxing out credit cards can lower your score and make future financial goals harder to reach. Monitor your credit regularly and make payments on time to maintain a healthy score.
   

• Relying Too Much on Credit Cards

  It’s tempting to use credit cards for everything, especially when cash is tight. But high-interest debt can quickly spiral out of control. If you must use credit, pay off your balance in full each month to avoid costly interest charges.
   

• Not Investing Early Enough

  Many people in their 20s and 30s delay investing because they think they don’t earn enough. But the power of compound interest means the sooner you start, the more you’ll earn in the long run. Even small contributions to a 401(k) or IRA can add up significantly over time. At a minimum, meet an employer’s contribution match if it’s available.
   

• Skipping Health and Life Insurance

  Young adults often think they don’t need insurance, but accidents and illnesses can happen at any age. Having health insurance can protect you from overwhelming medical debt and life insurance ensures your loved ones are covered if the unexpected occurs.

Financial mistakes in your 20s and 30s can have lasting consequences, but with awareness and planning, you can avoid many of them. Learn from my experience—make financial decisions today that set you up for a stable and successful future. Your future self will thank you.

OMB and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decision.