FINANCIAL MISTAKES TO AVOID IN YOUR 20s (THAT COST YOU LATER)

👋 INTRO: YOUR 20s—A DECADE OF CHOICES THAT SHAPE YOUR FUTURE

Your 20s are like the training ground for your adult life. You have more freedom, energy, and fewer responsibilities—but that doesn't mean it’s a free pass to ignore your finances. This is the time when small habits compound, and bad decisions come with long-term consequences.

Think of your 20s as planting season. The seeds (choices) you sow now will determine the harvest (results) in your 30s, 40s, and beyond.

🚫 12 BIG FINANCIAL MISTAKES TO AVOID IN YOUR 20s (AND WHAT TO DO INSTEAD)

1. Not Having a Budget (Because “I Don’t Earn Enough”)

Why it's a mistake:

Budgeting isn’t about how much you earn; it's about how well you manage what you have. Even a low income benefits from a plan.

📌 Real-Life Expansion:

Brian used to earn KSh 1,500 per photo shoot. Without a budget, he’d blow through money on transport and food. He later realized he was spending more on airtime than groceries. Using the 50/30/20 method helped him allocate wisely:

50% needs (rent, food)

30% wants (entertainment)

20% savings/investments

✅ What to Do Instead:

Use free tools like:

Money Manager App

Google Sheets templates

Envelope budgeting system for cash

2. Living on Credit or Mobile Loans

Why it's a mistake:

Instant credit from apps like Tala, Branch, or Fuliza seems convenient, but the fees and interest pile up fast. It's a slippery slope.

📌 Real-Life Expansion:

Faith thought KSh 300 here and there wasn’t a big deal—until she reviewed her M-Pesa statement. She realized she’d paid KSh 6,000+ in interest and fees in one month.

✅ What to Do Instead:

Create a sinking fund for regular needs like data or lunch

If you must borrow, compare APR (Annual Percentage Rates) before picking a loan provider

Always ask: “Will this loan improve my life long-term?” If not, skip it.

3. Not Saving Because You Think It’s Too Early

Why it's a mistake:

Delaying savings delays your security and wealth-building. Emergencies don’t wait for your income to increase.

📌 Example:

James, a fresh graduate, saved just KSh 1,000/month from his side hustle. By the time his motorbike broke down, he had KSh 12,000 saved—just enough to repair it and keep working.

✅ What to Do Instead:

Start with:

Lock savings tools: M-Shwari Lock, KCB Goal Savings

Stima Sacco or Waumini Sacco for safe, low-risk savings

Automate it weekly or monthly so you don’t have to think about it

4. FOMO Spending and “Soft Life” Pressures

Why it's a mistake:

Social media glamorizes consumption without showing the debt behind it. Living beyond your means creates false validation.

📌 Example:

Sharon realized that every KSh 5,000 weekend was not only hurting her wallet, but also her peace. She felt anxious by midweek, regretting the spending. She now goes out once a month and feels more in control.

✅ What to Do Instead:

Budget “fun money” ahead of time

Practice “no spend weekends”

Follow accounts that promote realistic financial wins, not only lifestyle content 

 The budget mom- YouTube channel 

5. Neglecting to Learn About Money Early

Why it's a mistake:

Being financially uneducated is like walking blindfolded across a busy street—you’re likely to get hurt.

📌 Real-Life Example:

Peter thought saving money in a current account was enough. He didn’t know about inflation. After a year, his money lost value while his peers were earning 9-11% returns from money market funds.

✅ What to Do Instead:

Read: “The Psychology of Money” by Morgan Housel

Listen to: So Money podcast by Farnoosh Torabi

Follow local influencers like @Money254 or @Centonomy on Instagram

6. Overspending on Rent or Lifestyle

Why it's a mistake:

Spending too much on lifestyle leaves no room for goals or emergencies.

📌 Example:

Kevin felt proud living in a “boujee” apartment, but when his job stalled, he couldn’t even afford Wi-Fi. He had to borrow to pay bills and ended up moving back home embarrassed.

✅ What to Do Instead:

Use the 30% rent rule

Consider:

Roommates Moving slightly outside city centers

Co-living setups like Banda Homes

7. Avoiding Health Insurance or NHIF

Why it's a mistake:

One emergency can wipe out months or years of savings. NHIF is a safety net.

📌 Example:

Mercy’s injury cost her KSh 18,000. With NHIF, she could have paid almost nothing out-of-pocket at a public hospital.

✅ What to Do Instead:

Register at NHIF Website

Pay KSh 500/month for voluntary contributions

Consider private insurance later for more coverage 

8. Not Tracking Your Spending

Why it's a mistake:

If you don’t know where your money goes, it will control you.

✅ Tools to Try:

Monefy App – color-coded, easy visuals

Money Manager – detailed categories

Excel Sheet – use filters to see where you overspend

Notebook method – old school but effective

Pro Tip: Track every expense for 7 days straight to reveal your money habits.

9. Not Setting Financial Goals

Why it's a mistake:

Wandering without a purpose often leads to overspending, burnout, or regret.

📌 Example:

Brian was hustling non-stop but never saw progress. Once he focused on a clear goal (KSh 60,000 laptop), he achieved it by cutting luxuries and setting weekly milestones.

✅ What to Do Instead:

Use the SMART goal method

Write down goals and review monthly

Use goal-setting apps like Goal Tracker & Habit List

10. Delaying Investing (Even a Little Bit)

Why it's a mistake:

Time is your biggest asset in investing. Delaying even by one year can significantly reduce future returns.

📌 Example:

Mary started investing KSh 2,000/month at age 22 in a Money Market Fund earning 10%. By age 32, she had KSh 412,000+. Her friend Alex started at 28 and had only KSh 150,000 by age 32 with the same amount.

✅ What to Do Instead:

Start with:

CIC Money Market Fund

Zimele or Britam Unit Trusts

Government bonds via CBK

Use apps like Hisa or Chumz App to get started with KSh 100

11. Relying Only on One Income Stream

Why it's a mistake:

The job market is unstable. One source of income means one point of failure.

📌 Example:

Jacinta lost her office job and had nothing on the side. Her friend Anita was tutoring online in the evenings and survived 3 months of unemployment with income from teaching.

✅ What to Do Instead:

Explore:

Tutoring

Freelancing (Fiverr, Upwork)

Selling digital products

Offering social media management to local businesses.

12. Ignoring Financial Boundaries With Friends or Family

Why it's a mistake:

Overgiving leads to resentment, and you risk becoming financially stuck to please others.

📌 Example:

Joyce always covered friend’s bills and lent money she couldn’t afford to lose. One day she had an emergency, and no one came through.

✅ What to Do Instead:

Set limits like: “I only lend what I can lose.”

Suggest non-financial help (e.g., advice, contacts)

Use polite phrases like:

“I’m not in a position to help right now.”

“I’ve budgeted all my income for the month.”

🧠 QUICK RECAP: DON’T DO THIS IN YOUR 20s 👇

❌ Mistake.            ✅Do Instead

No budget                -  Track top 3 expenses

Living on loans       -   Build emergency fund

No savings.              -   Automate small amount

FOMO spending.       -Practice JOMO

Not learning finance. - Read/watch finance content weekly

Expensive lifestyle.   - Live below your means

No insurance.        -Register for NHIF ASAP

No goals.                 - Set SMART goals

No investments     -Start small with MMFs or bonds

One income.           - Build a side hustle

People pleasing      -Say “no” kindly but firmly

🔗 RELATED POSTS ON THIS BLOG YOU SHOULD CHECK ON:

How to Start Saving Money on a Tight Budget

Smart Side Hustles You Can Start Today

The Ultimate Beginner’s Guide to Personal Finance in Your 20s

🎯 FINAL TAKEAWAY

Your 20s are not a free trial. The habits and decisions you make now will echo into your 30s, 40s, and beyond. You don’t need to be perfect—just intentional. Avoid these mistakes and take even small steps today, and your future self will thank you.