Top 5 Financial Mistakes I’ve Made In My Early 20s


Guys, these chain gangs are getting a little embarrassing. Let’s dig into the financial mistakes…

Warning: I just read this over. I’m sorry if some parts of it seem full of angst. I’m usually more hyper than this…case in point.

Alrighty, let’s start!

I’m a proud person. I can admit that I have a problem with admitting mistakes. I’m not much better at fessing up to my boo-boos than I was in my early 20s. Everything that I’ve reflected upon here took place around 5 years ago, give or take. I’m in my mid-twenties now and I wanted to be forthcoming with my financial mistakes, like a mature adult, but they do sting.

Oh well.

Actually, this is probably the best money exercises out there. It’s a great write-up for personal growth if you think about it. My goal here is to come back to this entry someday when I’m older and go “oh hey, that wasn’t even that bad loser.”

Related: 3 Profound Things I Wish I Knew Before Adulthood

I also believe that a person’s vulnerabilities can tell a larger story than their triumphs, so let’s start with a selected few of my fails.

1. Choosing to Go to a Private College

It was my pride that did this silly deed.

I wanted to be different from my friends who were, like me, accepted into various UCs (University of California). I was just trying to feel special. I was tired of everyone around me, I didn’t want to see the same people in college again so I decided to do something new and different by attending a completely different school. I thought I was being really cool and stepping out of my comfort zone by attending a closed-off, non-profit private school. They guaranteed the smaller class sizes that the UCs couldn’t offer.

Bad planning. It bit me in the bum. I missed my friends when I realized I had to build my social circle from scratch.

The education I received was fine. The classes were personal and professional. My professors were awesome. But I reflect back now and all I can think about is the total sunk cost of my education. I surmise my private school education was something around the ballpark of $40,000 overall, including the $20,000 I borrowed and paid back with interest.

This $40,000 that I could have avoided completely had I chosen a public university instead. My mom likes to be smart with me and ask if I’m using my degree at all,

“No mother, I’m not and you and I both know I’m not.”

The best option, if I could be so blessed to go back in time, I would have chosen to attend the first 2 years at the local community college and then transfer into a 4-year university instead.

One of my best friend, Cyn, was doing that. She’s smarter than me. I was too proud. Attending 2 years of community college and transferring in sounded like a cheat for the weak.

Oh yesssss, I did literally think that word for word.

Going to community college is like announcing to everyone that you’re going to hamburger college. I didn’t want to be that person. This girl here was determined to go to the best school at the best premium price. I was ready for more rigorous material. I wanted my professors to read the papers I wrote, not the teacher’s assistants.

The community college route was a lifeline for those who couldn’t get into a full-fledged university in the first place.

Erugghfff, my ugly pride!

I didn’t want to tell people I was going to a community college after high school. That’s reserved for the loser that slept through algebra and thinks Pythagorean is an Eevee evolution from Pokémon.

What a closed-minded fool I was. One of the smartest people I knew in high school ended up going to the junkyard community college nearby. He came from a broken home though. He wasn’t naturally driven to get out like I was and he had even less guidance. I mean, we all went to an inner-city high school, so choices seemed limited to us at the time. But I always thought he had mad potential.

I remember he could memorize the exact spelling of 20 completely new words after just 3 to 5 seconds of staring at them. I had to study like a mule for my vocabulary quizzes.

But nothing became of him, nothing I’ve heard yet. We all sort of lost touch. Maybe I’ll hear the news someday and hope he’s able to make it through the system.

Anyway, I digress. I wish I had chosen a cheaper experience for college instead of romanticizing the college experience.

2. Not Taking Credit Seriously

Once again, I thought I was so special and anti-system to avoid building credit. Did I mention I was a total goth kid?

Related: Will You Survive The Great Depression 2.0?

I was avoiding using credit cards on purpose even though I had a credit card. I heard through the grapevine that credit cards were evil and since this was in the wake of the credit crunch, I was determined to live without the aid of credit cards or any banks for the rest of my life.

Soooo naiive…so preciously stupid.

Related: What’s in our wallet? Ranking Our Past Credit Card Rewards

I was not very different from the typical millennial. That’s just the image we’ve retained from our experience maturing under one of the worst recessions in American history. No wonder millennials have a higher savings rate than boomers. I think we’re still scared.1

3. Not Opening Up a Solo 401k

I’ve always been self-employed in one form or another. Not much has changed today except I didn’t file for a solo 401k when I was self-employed in my early 20s.

I didn’t even know it existed. I just paid the amount TurboTax told me I owed. It probably cost me a few thousand extras. The money wasn’t the big deal. It was the opportunity cost.

I had a little Etsy store that was gaining steam and I considered scaling it up. But at the time, I thought after materials and shipping, I could barely make a profit, after taxes, to maintain a meager standard of living in uber expensive San Francisco. I wish someone told a clueless, financially orphaned girl that the first $18,000 is essentially free thanks to Uncle Sam. Plus things like materials and shipping are tax-deductible. Plusssss, you would only be taxed on the earnings after those expenses.

No, trust me, this knowledge is not common among regular millennials.

I did my tax research on an Etsy forum because I thought that would be the most relevant and accurate place for my situation. Apparently, everyone on that forum is as clueless as I was about taxes. The thread itself had 10+ pages and multiple contributors. I remember some members saying to just suck it up and let Uncle Sam take 50-60% of everything. It’s so ridiculous that this information isn’t just plastered all over Etsy when you sign up to be a seller. It’s ridiculously important and completely underutilized.

My friend started an LLC because of bad online tax advice. It’s not like her little handmade notebook e-store would require the work of a CPA and definitely not with her student loans coming due. I found out and told her, 2 years later, that she should actually have been filed under a Sole Proprietorship. The S.P. option would have saved her more money in fees, taxes and licensing.

4. Living in San Francisco, California (HCOL Area)

HCOL = high cost of living. My job could have actually been telecommuted. I was given a choice to move to Salt Lake City, Utah.

Naturally, I was afraid of taking the offer. I was living with my parents, rent free. I’ve never been beyond the Golden State. I was happily freeloading off my mom’s health insurance. Although my student debt had just been killed off, I still didn’t have much savings beyond a couple of thousand dollars. Lastly and most importantly, I thought I had a future with Mr. Executive at the time.

I decided to stay in San Francisco where taxes are one of the highest in the country. California’s state tax is about 12.5% on top of federal taxes. California is good about property taxes which are low because they’re grandfathered in at the time of the sale. But that’s wasn’t going to help me. I don’t own a pebble and definitely not in San Francisco! The other thing that isn’t expensive in California are utilities – but I was living with my parents. Our landlords covered the utilities.

5. Not Investing Earlier

This is a very common regret and I’m sure a lot of people have it on their list so I’ll keep it short:

I turned 18 in 2009. The onslaught of falling markets was what greeted me. It looked ugly and it sounded boring. I had zero desire to learn what was going on. That was 100% my ignorance and immaturity. That was 100% all my fault. Dumb, dumb, dumb girl.

Related: 4 Basic Investor Personality Types

To think if I could have poured the money meant for college into an index fund…how much more money could be mine right now…

…actually, yes, let’s do the math!

College cost me $40,000 and the S&P is up 268% since 2009 so…

Oh, mother of fruit loops.

I could have $140,000 more dollar-dollar bills Y’all!!!

RIGHT NOW. BOO. Opportunity cost, you ugly monster, I hate you!

I’m gonna stop the bleeding now and stop talking.

Let me end it with a joke:









My life.

Want to keep track of your finances effortlessly?

Sign up with Personal Capital and use their Net Worth Calculator for free. My husband and I began using Personal Capital towards the last quarter of 2017. They are a free financial service platform that helps you analyze your financial health all on one simple & secure account. This was a huge step up from the tedious dance we did before where we had to manually log in to our financial accounts (all 19 of them) individually.

The Financial Mistakes Chain Gang

Thanks to Chronicles of a Father with Cents and A Journey to FI for anchoring.

Check out other posts in the chain from:



Turning Point Money

Femme Cents

Jumpstart From Scratch

Gen Y Money

99 To 1 Percent

Winning Personal Finance

Atypical Life

Chief Mom Officer

Foreign Born MD


44 thoughts on “Top 5 Financial Mistakes I’ve Made In My Early 20s”

  • “I can only admit that I have a problem with admitting mistakes.”

    Are we twins? Ahhhh I have the same problem. I can easily admit and try to correct my mistakes at work, but it’s not the case when it comes to Mr. FAF. I somehow think that admitting my mistakes to him would make me look bad and lose my sense of authority or something (I could have copied this from my parents. I have no idea. I don’t wan to blame them either, but I truly rarely heard them apologize to each other.)

    Your mistakes are not the end of the world at all. If anything, I think you have learned valuable lessons from them. It’s just part of time. We just need to move on and never repeat those mistakes again. I have plenty financial mistakes of my own as well hehe.

  • I love the fact that you admit your college choice and home location were not ideal. We (the royal nation of WE) are actually clustering in about three metro areas and pushing harder and harder to get into a select number of colleges (although not your case exactly). But the truth is you can get a reasonable degree from decent school, make good money after and become FI. You can also telecommute and live in cheaper areas. A little bit extra helps a LOT upfront when it comes to saving.

    Someone needs to tell 18 year old kids these things before the mistake happens! Great job on doing this! If you read one line in this post here it is:

    “The best option, if I could be so blessed to go back in time, I would have chosen to attend the first 2 years at the local community college and then transfer into a 4 year university instead.”

  • Girl you are doing fantastic being in your mid twenties! At age 18 I think no one thinks about putting money in the stock market- so don’t beat yourself up! At age 18 I don’t even think I had much money to put into the stock market.

    I have the same snobbish mentality too about community college. I have a friend who went to community college and ended up getting stellar grades and transferred to university. She ended up getting into medical school 🙂
    GYM recently posted…Splitting Finances When There is Income Inequality

  • Wow, those are great mistakes you can build from. 🙂
    I still think it’s better to go to a 4 year program than going to the community college first. I made lasting friendships from my freshman year. Community college would be okay too if you can’t afford a 4 year program, but not my first choice.
    I agree with GYM. You’re doing very well. It was best to get those mistakes out of the way when you’re young.
    Joe @ Retire by 40 recently posted…My Annual Property Tax Gripe

    • Ohhh that’s quite true Joe! I didn’t think of that. I forgot that the majority of friends you make in uni gather in freshman year. Those connections are really important, especially if they’re in your chosen field of study. Thanks Joe 🙂

  • You are being too hard on yourself on a few items.
    All high school kids want to wear a cool college sweatshirt their senior year. It is crazy how important appearance’s are in the high school kid’s mind. I teach high school and believe me, you are not alone. Almost all of them would spend $50k of tomorrow’s money to look cool today.
    The timing between your graduation and the stock market jump is a coincidence that you never could have predicted, and it would have been foolish to throw all your money into the market at one time. It would have luckily paid off for you, but people just 2 years older than you, would have lost all their money in the crash. Eventually stocks will go down again, and everyone will be saying “If only I sold on a specific date.”
    Great post. Hopefully some even younger people will read it and learn from your mistakes.

  • Wow Lily, I wish I know as much as you do about money when I was in my mid 20’s. For some of us it took a lot longer to get where you are already. Love your post.

  • I had the same feelings as well when I was in college. I went to a State University(SF State) throughout my whole time being an undergrad but should of went to community college(CCSF) my first 2-3 years where I would have saved a good amount of money. But I was prideful like you where I should be in a state university and felt like I was above being in a community college.
    I think all the other mistakes you have aren’t all that bad. It’s great that your recognizing them at your late 20s and learning from it already. I didn’t even have a thought of investing when I was 18 and throughout most of my 20s.
    Kris recently posted…Getting Ready for a Natural Disaster

  • Ah the private vs public college debate. I agree and disagree. If you have the opportunity to attend an excellent state school and do well, kudos (I am specifically thinking only of some UCs, UT, UVa, parts of Cornell etc.). I do think some private colleges pay dividends in setting you up with a great network and opportunities thereafter. You need to be impressive and you need to kill it at those private colleges though, so if you are a regular smart bird, but not special, I don’t think I would recommend. So many doors have opened for me, however, simply because of my academic credentials.

    I think the really smart thing is to go to the true 2-year junior or comm college and then transfer to Harvard, MIT, Cal Tech, NYU, Yale, Princeton, or Brown. Not easy and you need to compare financial aid packages (scholarships/grants not loans) for freshman vs transfers. Definitely worth a look and up for debate. Great post!
    Heather @ bizewife recently posted…DIY Design Hacks: Crafting a Custom Closet on a Budget

  • For someone in their 20’s to learn these lessons already is very much ahead of the game. I still need to get on the investing…my parents are pretty smart with their money and tell me to invest in real estate instead with the way things are heading (I live in VERY expensive Hawaii so the return is higher if I can ever make enough to afford a down payment on a place…). And I love credit cards. So much. My parents were smart enough to build credit when I was in my teens (I can see how people find it amusing for a teeny 13-year old to be paying for things on credit). If you play the credit (cards) right, you can totally make so much money and other rewards from them!
    Sylvia | Mommy Over Work recently posted…Lady Bloggers Share Top Tips to Overcome the Blogging Hurdle

  • I can relate to a lot of these mistakes. Namely not taking credit seriously and not investing earlier. I just didn’t know much about personal finance at the time.

    One other thing that I regretted was taking out a loan to buy a new car a few years out of college. Definitely a mistake that I would warn others not to make.
    SomeRandomGuyOnline recently posted…Student Loan Balance = $0

  • Ego is the enemy. I hear ya, Lily. I should have gone to a community college too. But that was for “losers.” So I went to big State U with absolutely no direction. I ended up becoming a sociology major. Meh. The only thing that saved me was that I went to college in the early 80s, and college was much more affordable then. My last semester at Buffalo University cost $540. Thanks for sharing your mistakes. And excellent job on not letting your early mistakes become lasting mistakes. I wasn’t so fortunate. My mistakes continued well into my 30s. Perhaps I should join the chain. Cheers.
    Mr. Groovy recently posted…Counting Cards, Shiller PE Ratio, and Sequence of Returns Risk

    • Oh wow $540! That’s crazy compare to the first class robbery that it is today. The last time I checked, community college was $125 per credit (and you need a lot of credits!) Yes join the chain 🙂 it’s voyeurism at it’s best Mr. G 🙂

  • You past on a chance to live in SLC! I love to ski. Would love to spend a few winters there. Thanks for sharing your mistakes. I think many entrepreneurs can lean from the solo 401k one. It can result in a huge tax savings!

  • Honestly I am just impressed that you actually recognize some of this stuff as mistakes. It took me over a decade longer than you to come to that realization.

    I cannot commend how you and your husband have set yourself up for such a great life in the upcoming decades by what you have done right now.

    I wish I had invested earlier as well. The magic of time and compound interest is truly remarkable when you add another decade or two (I really didn’t start investing till mid to late 30s).

    I know exactly how you feel about choosing a university (I went to Johns Hopkins (fortunately my mom paid for it) but I had to finance my medical school. I definitely get coming out of high school you wanted to let people know you were smart enough to get into big name expensive schools.
    But you know what? How many patients have asked me where I got my training? In over 15 yrs of practice not one of them has (although being a radiologist I don’t have as much interaction with patients like a primary doc has but still).

    You got the most important decision correct. That’s finding a suitable partner who is on the same financial and emotional page as you. That in itself can compensate for pretty much any of the other mistakes.

    Keep up the good work

  • Haha I still have big conversations with my dad so that he uses his credit card and gets reward, but it will still be NO. I am trying to get a credit card now in Mexico (currently living here) and it’s so complicated as I don’t have credit history that counts here. Hence, need to use my canadian credit card, but get charge an extra % for the exchange rate.

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