You could lose hundreds of thousands of dollars and ruin your financial future because of just a handful of bad purchases right now.
I’m not kidding: your 20s are the most crucial time for ensuring a great financial future, and any good or bad decisions you make will have a huge impact on the rest of your life.
I know I am years away from my 20s, but I’ve spent the last 6 years helping millions improve their finances, and I’ll share 7 terrible purchases to avoid – and one game changing move you must make – to guarantee an incredible financial future.
Purchase #1: High End Fashion
Picture this: You’re scrolling through social media, bombarded by ads and influencers telling you that you ‘need’ the latest high-end fashion trends.
You think ‘I MUST have that’ and end up spending way more than you can afford. They might look great, but they also come with astronomically high price tags.
If you think about it, the $2,000 price tag of a designer handbag is mostly just for the brand name – not the product itself.
With the trends changing all the time, what’s in style today might not be tomorrow. And that $2,000 handbag will just gather dust in your closet.
Instead, just stick to high quality, classic items that can last you many years. For example, instead of buying a $300 pair of trendy sneakers, opt for a $75 pair that looks great and will last too!
And if you really want that designer tag, consider buying gently used items from online platforms or thrift stores.
While there’s no doubt this will save you a ton of money, it’s nothing compared to the disastrous purchase I’ll reveal later.
Purchase #2: A Brand New Car
Does this sound familiar? You’re at the car dealership, and see your dream car. It has that new car smell, and you can’t wait to drive it off the lot.
Although you might find it irresistible, this would actually be one of the worst purchases you can make in your 20s. Here’s why.
If you were offered $10,000, would you keep it or throw it away? Of course you’d keep it!
Well, a new car loses about 20% of its value as soon as you drive it off the lot – which is the same as throwing away $10,000.
New cars also come with higher insurance premiums, leading to even more money being lost over time.
So instead of buying or leasing a brand new car, let someone else deal with the depreciation.
Just buy a reliable pre-owned car. Most 2 or 3 year old cars are in great condition, and will save you over $20,000.
Purchase #3: Newest Smartphones
I’m sure this is a scenario you’re familiar with: You’ve just bought the latest smartphone for $1,000, feeling on top of the world. It has all the new features, and you can’t wait to show it off.
But then, in just a year, a newer, even better model comes out. Suddenly, your expensive purchase feels outdated and you are tempted to spend even more on the new model.
Instead of always chasing the latest technology, a smarter alternative is to buy last year’s model or a refurbished phone. The differences are often minimal, giving you very similar features at a significant discount.
But if you must buy the newest phone, make sure to keep it for at least a few years.
And let’s not forget about accessories. Companies make a fortune selling overpriced cases, chargers, and headphones. Instead, go for third-party alternatives that are just as good but are only a fraction of the cost.
Purchase #4: Luxury Vacations
Having memorable travel experiences while you’re in your 20s is important, and there’s no doubt you should spend money on it.
But it’s also important to make sure you can actually afford the vacations you take. Spending extravagantly on luxury hotels, Insta-worthy excursions, and impulse shopping can add up quickly and derail your finances for many years.
Consider these travel options instead: stay in budget friendly hotels, travel during the off-season, or explore destinations closer to home. This way you can still have amazing experiences without overspending.
For example, a backpacking trip with friends can be just as fun and memorable as a luxury resort stay, at just a fraction of the cost. Remember: it’s the experience, not the price tag, that matters.
Purchase #5: Unnecessary Subscriptions
How often have you signed up for a free trial, say for a streaming platform or an app, and forgot to cancel it?
It might just be a few dollars per subscription, but if you don’t use it, that’s just wasted money that can quickly add up over time.
Take a look at what subscriptions you’ve signed up for and how many you actually use and cancel any that you don’t use regularly. For instance, you can pick one or two streaming services that you actually enjoy watching instead of being subscribed to 4 or 5.
Canceling subscriptions you don’t need can save you hundreds of dollars every year, with basically no downside!
Purchase #6: Gambling and Sports Betting
Many people get caught up in the excitement and the potential for quick wins in gambling. The recent rise of sports betting has made it more exciting than ever for 20-somethings.
But the odds are always stacked against you. Never forget: the house always wins, and gamblers always end up losing money in the long run.
If you let gambling get out of control, it can lead to catastrophic financial losses. The only way to avoid this is to set a strict limit on how much money you’re willing to lose and stick to it.
Think of gambling as a form of entertainment, not a way to make money.
Purchase #7: Eating Out Frequently
Let’s be honest, who doesn’t love eating out? It’s fun, convenient, and delicious.
And let’s not forget the meal delivery services like Doordash or Uber Eats, that make the process totally effortless!
But eating out or ordering in frequently is actually one of the worst purchases people in their 20s can make, as the costs add up really fast.
Take a look at how much you’re spending on meals, drinks, and tips each month – I bet it’s a lot more than you realize. Spending $10 on a meal and $5 on a drink everyday might not sound like a lot, but it adds up to over $5,000 a year!
If instead, you prepared your own meals and drinks, you could save over $4,000!
Who knows? You might find a new passion, and it’s certainly healthier than eating out all the time. Even if you splurge on a nice meal once in a while, you’d still keep your finances in check.
BONUS Tip: Impulse Purchases and Credit Card Debt
Here’s a special bonus tip! It’s the most important spending you need to avoid in your 20s, and it’s something we’re all guilty of: impulse purchases!
It’s so easy to see something cool in a store or online, think “I must have that”, and then buy it right away without considering if it’s something you really need.
Although at the time it seems like a good purchase, just look around to see how many of those are simply collecting dust.
This problem gets even worse if you’re using a credit card to make those impulse purchases. It’s so easy to just swipe your card and worry about paying it off later!
Credit card debt is the worst possible debt given its high interest rates, and the ease with which you can rack up a high balance.
Did you know 18-24 year olds have $3,200 in credit card debt on average? Even if they pay it off at $100 per month, it’ll take more than 4 years to pay off, and cost $2,000 extra in interest.
That’s $2,000 that could have been used for key life goals like buying a house or saving for retirement!
To avoid this, use the 24-hour rule. If you see something you want to buy, wait at least 24 hours before making the purchase. Often, you’ll realize that you don’t really need – or even want – the product.
By managing impulse purchases and avoiding credit card debt, you can be smart about your finances and focus on what really matters.
Take Action Now!
But just avoiding mistakes isn’t enough. There is one game changing move you must make in your 20s that’s guaranteed to get you ahead of 99% of people.
To find out what it is, check this out: Get Ahead of 99% of People: 3 Life Changing Money Habits