The 4 Worst Money Moves You Can Make in Your 20s

Your 20s are an exciting and challenging time. You're in the early stages of adulthood, which means taking on more responsibilities. One of those responsibilities is managing your money.

Pretty much everyone makes their fair share of financial mistakes. It's normal, and at this age, you have plenty of time to fix them and bounce back. But some bad decisions can have a long-lasting impact, so you should do your best to avoid them.

1. Not saving for retirement

I realize that retirement probably isn't the first thing on your mind. When I was starting out in my career, I'd have to keep myself from rolling my eyes every time some older adult talked to me about saving for retirement.

And now that I'm a little older (just a little), I wish I'd gotten serious about my retirement savings sooner.

Here's a change of perspective that helped me a lot: Don't look at it as saving for retirement when you're old. Look at it as saving enough that you can retire when you want. In my case, I heard about the early retirement movement and how some people were retiring at 50 or younger. I realized that saving is what gives you the freedom to retire on your terms.

Even if you can't save much, try to save some amount of money. It could be $50 per month in a 401(k) or an individual retirement account (IRA). The earlier you start, the more your savings will be able to grow.

2. Being too strict about your spending

People in their 20s generally don't save too much money, but there are exceptions. High achiever types sometimes keep their expenses to a minimum and save heavily.

Even though saving money is a good habit, it is possible to take it too far. If you never go out with your friends or travel anywhere because you want to keep your costs down, that's not healthy. And you could end up regretting it later in life.

Managing money well means having a balance between being responsible and enjoying life. You need to use some of your income to pay your bills, and you should contribute to a savings account and retirement fund. But also set aside some fun money that you can spend on yourself.

3. Getting complacent about your income

As a young adult, you're in the early stages of your career. You don't have much experience yet, and you may be earning an entry-level salary. That's normal. What's important is that your starting salary isn't your permanent salary.

Increasing your income is one of the most impactful money moves you can make, and your 20s are the perfect time for it. You're only scratching the surface of your earning potential. But some people miss out on hundreds of thousands of dollars throughout their careers, because they get complacent about their income.

Here are a few ways to get proactive about earning more:

• Become a top performer at your job. More productive people have a better chance of moving up.
• Talk to management about opportunities for a promotion or raise. Ask what performance metrics you need to reach for a pay increase, and see if there are higher-paying positions that you're well-suited for.
• Keep your resume updated and look for new jobs regularly. Switching jobs is often the best way to get big pay increases.

4. Going into credit card debt

Credit card debt is a normal part of life in the United States. Consumers have $1.129 trillion in total credit card debt. Because it's normalized, many people see it as no big deal, but it's actually very costly.

Now, a credit card can be a useful financial tool. If you pay the bill on time and don't charge too much, that can build your credit score. The best credit cards also have lots of other perks, such as cash back or travel rewards.

But you'll get into trouble if you use a credit card to buy things you can't afford. Even though you can borrow money with credit cards, it's not a good idea. They charge extremely high interest rates, with the average being over 20% right now. The safest way to use credit cards is to only use them for purchases you can afford and pay your bill in full every month, so you don't get charged any interest.

The money moves you make in your 20s can either set you up for success or make your life more difficult later. If you avoid these common mistakes, you'll be on the right track.