5 Financial Mistakes I Have Made In My 20s (So Far)

“Success does not consist in never making mistakes but in never making the same one a second time.” – George Bernard Shaw

Hi WF Family!

When you desire to be financially free at a young age, you tend to make many mistakes and also many successful moves. You can earn good money but also lose that money just as fast. The good thing about being young although, is that you can bounce back faster than someone with kids and a family. Regardless, some mistakes you should learn from others in order not to emulate them yourself. Here are five of my financial mistakes that I have made so far in my 20s.

1. Trying Risky Investments.

This one was more so around 19 years old. I heard about Binary Trading from a friend of mine. This, in layman’s terms is a financial exotic option in which the payoff is either some fixed monetary amount or nothing at all. So let’s say you expect the currency pair EUR/USD to move from 1.14783 to 1.14854 in one minute, depending on how much you put on that “investment”, you can either come out with a crazy profit or nothing at all. In the beginning, you might make some money, but then that’s when things can go wrong. Instead of putting $20, you may put $100.  This is where you can lose a lot of money fast. I won a lot but I lost a lot too. I just knew at that point I should stop, so I did.

Takeaway: Risky investments are not worth it. A fast come up almost always results in a fast come down. 

2. Getting a Business/Personal Line of Credit. 

This one I still have but I was not using it wisely in the beginning. I got a huge sum of money from the bank to use for business purposes, which I did end up doing. But then you want to help others and that is where you get burned. Not everyone is as truthful or understanding as you. You may know that if someone lends you money, you return it promptly. Not everyone is like that. A line of credit is great if you plan on placing it in good investments and you intend to pay it off in a decent period of time. Make sure you have a good income to cover your monthly bill and other living expenses before you get an LOC. Thankfully, I never spent any of that money on personal luxuries or childish things, but it is not hard to do so.

Takeaway: Don’t get one unless you can handle it, responsibly. 

3. Jumping In and Out of Stocks.

I started investing in 2015, and every year I become a better investor. One thing that took me some time to learn was that if you are invested in a good company, just because another good opportunity comes along, that doesn’t mean you need to sell what is in your portfolio to buy another company’s stock. I studied Warren Buffett, Peter Lynch, and others of the like but would still sell my shares for other company shares every so often. Some of the companies that I have sold have doubled (and some even 10x that) within a year of me selling. What I stick to now is never selling, only buying. When I get paid, I buy shares, but I no longer sell, unless the company itself is tanking with no return.

Takeaway: To build wealth, you must buy, hold, and reinvest into itself – not buy, hold, sell, sell, buy, sell. 

4. Not Budgeting Efficiently. 

This is something that I am still trying to work on. I am good at saving, but being meticulous about every cent and its location isn’t my strong suit – that’s why the partner I am with is everything I am not! As a student, you really don’t tend to care about budgeting because you don’t make a ton of money, so you just use what you have and live hand to mouth. But oh! does that change once you move to another country! Budgeting not only ensures that you have enough money to save and invest every month, but it allows you to enjoy your life too without any financial worries. When you know where every cent is going, it is not hard to fix any sudden hiccups that life may bring you.

Takeaway:Start budgeting with your pennies at a young age so you can budget with your millions in your old age. 

5. Using Your National Credit Card, Internationally. 

Fees are a pain when that credit card statement comes. But what about when you use your credit card while you are on a holiday and you get the currency exchange fee PLUS the ACTUAL amount in your home country’s currency that you spent? This is an annoying thing about spending while away. Of course you can bring cash on your trips but sometimes you want to keep cash for those “cash-only” places, so you opt for your credit card. It isn’t the use of the card that is the problem. The problem is not being aware of how much you are spending in foreign currency that is being converted into your home currency. They say don’t go on vacation and come home a daddy, but they should also say, don’t go on vacation and come home owing more than it cost for your tickets to go on vacation!

Takeaway: Use cash at Harrod’s, not your Amex. 

These are just a small list of what I will be able to share by the time I am thirty (mortgages, insurance policies, all the scary things). You probably won’t have a problem with all of the five that I shared but maybe even one might come up while you are in your twenties. Just be wise with where your money is going and try to keep as much of it and be very picky about when you release it. When you are young, this is the best time to make mistakes. When you get to 25 and up, your mistakes will begin to stick with you for longer than anticipated. Try to learn as much as possible when you are young so you won’t be a novice when it comes to important financial decisions in the future.

Until next time,

Live Long and Prosperous.

J.M.

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This website and its contents are solely opinion-based. The information provided does not constitute investment advice. Accordingly, due to the information on this blog only being of personal opinion and experience, it should not be considered professional financial decision advice. The ideas and strategies expressed should never be considered without first assessing your personal and financial situation, or without consulting a financial professional. My thoughts and opinions will change over time as I learn and accumulate more knowledge.