9 Big Money Mistakes People Make When They're Young

MANAGE MONEY - BUDGETING
It's not too late to save yourself from bad financial decisions you made when you were younger.
Updated March 2, 2023
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You may look back on your younger years and cringe. Maybe you weren’t mature enough to handle a new job or you chose relationships with the wrong people. 

And now that you’re older with more financial experience, you also may regret some poor financial decisions.

So what did you do wrong? Here are some big money mistakes to learn from to help you boost your bank account and ensure that history doesn’t repeat itself.

Choosing the wrong career

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You may think you know exactly what you want to do when you get out of college, but you may not have considered how much you can make in that career.

It’s important to consider several factors when choosing a career, such as happiness or interest, but factoring in your salary potential could also be important to your future financial success — and personal happiness. 

And while it might be tough, depending on your job, there are ways to change your career or adapt it to a new direction if you don’t like your first choice.

Getting into credit card debt in college

Ratta Lapnan/Adobe woman pressing two hands on forehead feeling stressed

You may find credit card companies on your local college campus signing up potential cardholders with little or no credit check. 

You’re on your own for the first time, so this seems like a good idea, as well as a great convenience. But as a result, you can have credit cards that you may not know how to use.

Take some time to build up a credit score by choosing a credit card with a low interest rate and try to limit your spending only to what you can afford. 

Remember that with a credit card comes a credit card bill that you will need to pay. And when the bill does come, always pay it off in full, each month.

Not investing in retirement early

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You may be overwhelmed on your first day at your new job. And the employee orientation doesn’t help. You have to make decisions about health insurance and get the paperwork set for direct deposit for your paycheck. 

As a result, the part about your company offering matching retirement funds may have been something you ignored or decided to deal with at a later date.

But taking advantage of your employer’s retirement benefits could pay off big for you later if you start early. Your employer may be contributing matching funds for anything you save. 

If you start early, even if it's not much, your investments can build up over time in a way that wouldn’t happen if you get a later start.

Spending too much on housing

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Maybe you want to live on your own or you would like more space. Or perhaps you even think buying would be a good early investment decision.

But be careful with how much money you end up spending on housing. It’s usually the biggest expense you’ll have each month, and it’s not easy to cut back on rental payments or a mortgage once you commit to it.

Comparing yourself to others

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It can be hard to not be envious of someone else with more money, trendier clothes, or a nicer place to live.

But comparing yourself might lead you down a financially destructive path if you try to keep up with them by spending more money than you have or by buying things that you can’t afford. 

Instead, set some financial goals to work toward and create a budget so you can reach those goals.

Not tracking your spending

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A budget can be a great asset to your financial future and can help you keep track of the money you bring in and where it goes. And if you don’t keep track of your spending, it can easily get away from you and you may end up spending more than you have.

So if there’s one thing you could tell your younger self to do, it would be to create a budget and keep track of your money. You could have extra money saved or invested if you had watched your income and expenses early on.

Impulse purchases

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It can be easy to see something and just buy it, but you may find yourself in trouble when it comes time to pay for it. Instead, try to take a step back and check your budget and your goals. 

You should also take the time to shop around to find a more affordable alternative or a better price for the same item.

Pro tip: It’s never too late to start paying down your debt from impulse purchases in your past, so find some clever ways to pay off debt and get back on a positive path.

Borrowing too much money

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It can be easy to borrow money thinking that you have plenty of time to pay it back, but those debts will come due at some point. 

And while the debt is outstanding, the interest payments could overwhelm your monthly budget. You could be in real trouble if you don’t have the money to cover those debts.

You can also damage important relationships if you borrow money from family and friends and can’t pay it back. If you do have to borrow money, it may be better to endure the extra paperwork and borrow from a financial institution. 

Just make sure that you’re not setting yourself up for more obligations than you can handle and that you’ll be able to repay the loan when it’s due.

Skipping insurance

Syda Productions/Adobe man in blanket with laptop drinking hot tea

You may think skipping insurance can save you money — and when you’re young, it’s easy to think that nothing will ever happen to you — but you could be in deep financial trouble if you forgo insurance. 

If you do have an accident or a medical issue, the bills can stack up very quickly, and without health insurance, you may be responsible to pay. A fire, flood, or other disasters could destroy your possessions. Without renters or homeowners insurance, you'll have no way to replace and/or repair them.

Make sure you find a way to get at least some insurance and add it to your budget so you have money set aside to pay the premiums.

Bottom line

Natee Meepian/Adobe happy businessman celebrating success

Sometimes you have to make mistakes to learn from them, and unfortunately, your financial mistakes are no exception. 

But your youth will not have been misspent if you learn valuable lessons, too. But it’s important to start those new habits now so you can reap the rewards later.

It’s also good to remember that you can (almost) always fix a mistake to get back on a sound financial path for the future. 

You may be able to reverse bad habits so you can see if you can retire early or save enough for a major purchase like a home or a car. 


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Author Details

Jenny Cohen Jenny Cohen is a freelance writer who has covered a bit of everything, from finance to sports to her favorite TV shows. Her work has been featured in The Wall Street Journal, USA Today, and FoxSports.com.

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