Many of us make financial decisions in our twenties that we may regret. Whether it's failing to save for retirement, investing in the wrong assets, or simply spending too much on frivolous things, it's easy to make mistakes that can set us back financially. In this article, we share ten great financial insights from various folks.
Recently, in an online discussion, many people shared their mistakes in their early 20s as a warning for others to avoid them.
1. Index Funds for Young Investors
According to one, they wished they had known about index funds during their twenties. At the time, the best option for them was to invest in mutual funds, which had high costs. However, with $5000 in savings, they could have invested in index funds and had it vested for the past 20 years.
2. Balance Finances and Fun for a Stable Future
One person advises young adults to balance saving, investing, and having fun to secure a stable financial future while still enjoying life.
For them, they preferred traveling vs. buying “stuff,” as well as prioritizing physical fitness to maintain good health. By following these principles, young adults could set themselves up for a stable financial future while experiencing all life offers.
3. Avoid Frivolous Spending
In hindsight, a user laments spending their hard-earned paychecks on partying and electronics instead of investing in their 401k. Instead, they suggest that young people avoid frivolous spending and focus on building their retirement savings as early as possible.
4. Stock Investing for Young Investors
Looking back, one man wishes he had invested in stocks earlier in life and regrets missing out on the opportunity to buy Apple stock. He admitted to prioritizing a large house over investing and recognizing that he could have made more money by doing the opposite.
Despite this, he's since sold his large house and downsized to a smaller condo and now focuses on wise investment decisions, including owning Apple stock.
Another user wished they had bought more Bitcoin when it was just 0.11 cents. They regretted not investing more in cryptocurrency when it was still in its infancy. They believe they would have made a fortune if they had held onto their Bitcoin and sold it at its peak value of $20,000 per coin in 2017.
The question now is whether or not it's too late?!?!
6. Choosing the Right Major for Maximum Earning Potential
With hindsight, an individual wishes they had pursued their computer science or electrical engineering education earlier in life, recognizing that it would have led to higher wages.
Even though they ended up working in these fields, they earned lower wages than they would have with formal education. So they advised young people to consider the earning potential of various majors and to choose one that aligns with their interests and strengths.
7. Timing the Market
Do not try to stock pick and time the market. A user warned, “I lost a ton from trying to ‘get rich quick.'” They continued that they should have bought index funds and let it ride.
8. Sleeping More for Financial Success
Recognizing the importance of sufficient sleep for good decision-making, mental acuity, and overall health, one person wishes they had slept more in their twenties.
They shared that fatigue often impacted their numerical clarity, causing them to scramble numbers and make incorrect decisions with confidence.
9. Benefits of IRAs
Had they known about Individual Retirement Accounts (IRA) during their college years, this user believes they could have achieved financial independence and retired early.
They also acknowledged that avoiding the temptation of buying shiny, material things in their 20s could have helped them achieve financial independence and retire early.
10. Picking a Well-Paying Career Path Early
Finally, one wishes they had picked a well-paying career path in their early 20s and committed to it rather than waiting until their late 20s to get serious about their finances.
They admitted that they didn't start making any real money until their early 30s and were always on the edge of homelessness. They could have avoided their financial struggles if they had focused on building a career earlier.
This thread inspired this post.