Introduction
Your 20s are an exciting time — you may have started earning, moved to a new city, or begun chasing big dreams. But while you’re learning to “adult,” there’s one skill that often gets ignored: managing money.
Most people think they’ll figure out personal finance later. Unfortunately, later usually means after debt, stress, or missed opportunities. The truth? What you do with your money in your 20s shapes your entire financial future. These are the money mistakes to avoid in your 20s.
Table of Contents
In this post, let’s explore 7 common money mistakes young Indians make — and how to avoid them.
1. Ignoring a Budget
TThe greatest myth? “I don’t make enough money to make a budget.”
The reality? Every income level should create a budget.
Your money vanishes if you don’t keep track of your expenses. You’re wondering, “Where did all my salary go?” at the end of the month.
Make it right:
Start out easy. Put your earnings and outlays in writing. Make use of any simple template or the 50/30/20 rule.
Try a basic Google Sheet or apps like Goodbudget, Money Manager, or Walnut.
📌 Budget = Freedom, not restriction. It helps you spend better.
2. Living on Credit
Although they seem strong, credit cards have drawbacks.
You are creating debt rather than wealth if you are using a credit card to purchase items that you cannot currently afford. Additionally, interest and late fees can mount up rapidly.
Fix it: Only use credit if you are able to make monthly full payments. Otherwise, only use debit or UPI.
Don’t build credit mindlessly.
3. No Emergency Fund
Medical bills, family emergencies, and job loss are all unpredictabilities in life. You will have to borrow money or get into debt if you don’t have emergency funds.
Make it right:
Create an emergency fund; even ₹500 a month goes a long way.
Goal: three to six months’ worth of essential costs.
Store it in a different liquid fund or savings account.
4. Spending to Impress
New phone. Stylish shoes. That weekend trip to Goa. It’s easy to get caught up in a “lifestyle trap,” where you spend money just to appear successful.
However, true wealth is often hidden. Many wealthy people don’t flaunt it; they build it quietly and steadily over time.
To avoid this trap, here’s a tip:
Before making a big purchase, pause and think. Ask yourself if you really need it or if you’re just trying to impress others.
A smarter approach is to invest in things that grow in value over time. Consider spending on skill-building courses, buying books to expand your knowledge, or boosting your savings for the future. These choices contribute to long-term success rather than short-term appearances.
“Learn more in our Beginner’s Guide to Budgeting”
5. Not Investing Early
When you’re in your 20s, you might think investing is something you can put off. However, starting early is actually a big advantage.
Consider this: if you invest just ₹1,000 each month in mutual funds, it can grow into a significant amount over the years due to the power of compound interest.
Here’s how you can get started:
- Learn the essentials: Understand mutual funds, SIPs, and PPF.
- Set up an account: Use platforms like Zerodha, Groww, or Paytm Money to open your account.
- Begin small: Start with a modest amount and make sure to invest regularly.
If you start investing in your 20s, you will have over 30 years to let your money grow. Don’t wait for the “perfect” moment—begin today and make the most of the time you have.
6. No Financial Goals
If you don’t set specific goals, you’re unlikely to achieve them. Without goals, your money tends to disappear on random expenses.
Here’s how you can change that:
- Decide on clear goals with set deadlines, such as:
- Save ₹1 lakh for a trip by next year
- Build up a ₹50,000 emergency fund over the next 6 months
- Invest ₹5,000 every month in SIPs for the next 5 years
When you assign a purpose to your money, the process of saving and budgeting becomes more engaging and meaningful, rather than feeling like a chore.
7. Not Learning About Money
Schools usually don’t teach personal finance, so understanding it is often up to you. Without this knowledge, you might keep repeating the same financial mistakes.
To improve your financial skills, make learning about money a regular habit. You can do this by reading finance blogs(RupeeNest), listening to finance podcasts, or watching informative videos. Some popular creators in the field include:
- CA Rachana Ranade
- Ankur Warikoo
- Pranjal Kamra
Remember, even gaining a small amount of knowledge can lead to significant improvements in managing your finances.
Bonus: Don’t Be Too Hard on Yourself
Everyone makes mistakes, and that’s nothing unusual. What truly matters is taking the time to learn from these errors and striving to improve with every experience.
Your 20s are an excellent period to start building smart and responsible money habits. Starting early means you can develop these habits more easily over time, making it simpler to manage your finances later in life.
Final Thoughts
Steering clear of these 7 money mistakes can really transform your financial path. Start by adopting one new habit and gradually incorporate more. Plan a budget to track your spending and saving. Make it a routine to save money regularly. Educate yourself continuously about managing your finances effectively. Keep in mind that the actions you take today shape your future.
Perfection isn’t necessary. It’s all about starting the journey.