14 Money Mistakes to AVOID in Your 20's

Summary

This video script advises 20-somethings to avoid common financial pitfalls, emphasizing the importance of investing in oneself rather than overspending on status symbols. It suggests prioritizing learning and personal growth over immediate earnings, automating investments, and being mindful of spending habits. The speaker also stresses the value of surrounding oneself with supportive individuals, living in a conducive environment, and experiencing life-affirming adventures while in one's 20s.

Takeaways

• 📱 Avoid the temptation to overspend on status symbols like iPhones or luxury cars in your 20s, as they can lead to financial strain and don't impress those who truly matter.
• 🎓 Prioritize learning and education over immediate earnings; taking jobs for the sake of learning rather than just for the paycheck can set you up for long-term success.
• 💰 In your 20s, focus on investing in yourself and increasing your earning capacity rather than just saving money, which has a limited impact given the lower income at this stage.
• 🏦 Develop the habit of saving by setting aside money before spending, and invest it wisely rather than just letting it sit in a bank account.
• 🔒 Automate your investments and make it harder to spend on non-essential items to ensure that you're consistently investing in your future.
• 🛍️ Avoid impulse shopping and stick to a budget; having a clear list of what you need can prevent unnecessary spending.
• 🍽️ Consider the time value of cooking versus takeout; sometimes spending a bit more on food can save you time and effort better spent on personal growth.
• 👫 Choose your roommates and social circle wisely; being around people with similar goals can encourage and support your financial and personal growth.
• 🏠 Prioritize living in a convenient location that saves you time and resources, even if it costs a bit more, as the trade-off can be worth it for the lifestyle it supports.
• 🚶‍♂️ Model the right behaviors and habits from successful people, but understand that the sequence of their actions matters and what works for them may not work for you at your current stage.
• 🕰️ Measure the value of your money by considering how long it takes you to earn it, which can provide perspective on whether a purchase is worth the time spent working for it.
• 💹 Focus on saving and investing a portion of your income each month as a personal record and goal, rather than just trying to match your earnings.
• 🔍 Make it a daily habit to check your bank account to stay aware of your financial situation and to confront any issues head-on.
• 🌄 It's okay to spend money on unique, once-in-a-lifetime experiences during your 20s that you will remember and cherish later in life.

Q & A

What is the main advice given against buying an iPhone in the script?

The script advises against buying an iPhone in favor of an Android because it suggests focusing on not overspending on status symbols in one's 20s, which can lead to financial mistakes.

Why is it suggested that people in their 20s should not overspend on status symbols like a Lamborghini?

The script argues that the people who matter are not impressed by such displays of wealth, and that those who are ahead financially want to see others learning and hustling, not spending recklessly to impress peers.

What is the script's stance on taking jobs for the purpose of earning rather than learning?

The script advises against taking jobs solely for the purpose of earning money in one's 20s, as it's a time for learning and building skills that will increase earning potential in the long run.

Why is saving money in a traditional sense considered a mistake according to the script?

The script suggests that instead of just saving money, individuals in their 20s should invest in themselves and their earning capacity, as the potential for increasing income far outweighs the benefits of traditional saving.

What is the recommended approach to handling money in one's 20s as suggested by the script?

The script recommends prioritizing investment in oneself, automating the investing process, and manualizing the spending process to ensure that money is allocated towards learning and growth rather than unnecessary expenses.

Why is it advised not to go shopping without a specific purpose?

The script advises against aimless shopping as it often leads to wasteful spending. Instead, it promotes sticking to a budget and a pre-approved list of items to purchase.

What is the script's view on cooking versus taking out food in terms of financial sense?

The script suggests that once an individual makes more than a certain threshold per hour, it may be more financially sensible to take out food and save the time that could be spent earning money or investing in oneself.

Why is living with the wrong people considered a financial mistake in one's 20s?

The script argues that living with people who do not share the same goals or who may undermine one's ambitions can be detrimental to financial progress and should be avoided.

What is the importance of a micro-community according to the script?

The script emphasizes the importance of living in a convenient location that is close to necessary amenities and work to save time and money, even if it means paying a premium for the location.

Why should one not model the wrong season of life according to the script?

The script advises against trying to replicate the lifestyle of someone who is further along in their career before having the necessary track record and reputation, as it can lead to financial missteps and a lack of authenticity.

What is the script's advice on measuring financial success in one's 20s?

The script suggests measuring financial success by how much one is able to save and invest in oneself each month, rather than focusing on the income earned.

Why is it recommended to check one's bank account every morning according to the script?

The script recommends this practice as a way to confront financial reality and gain a better understanding of one's spending and saving habits, which can lead to improved financial management.

What does the script say about spending money on one-time experiences?

The script supports spending money on unique, one-time experiences that are only possible during certain periods of life, as long as they are done in moderation and align with one's long-term goals.

Outlines

00:00

📱 Avoiding Status Symbol Purchases in Your 20s

The first paragraph emphasizes the importance of avoiding costly status symbols like iPhones and Lamborghinis in one's 20s. It suggests that showing off such items to other 20-somethings is misguided, as those who are truly successful value hard work and learning over material possessions. The speaker advises investing in oneself and one's earning potential rather than overspending on items that won't impress those who matter. They also stress the importance of understanding that in one's 20s, the focus should be on learning and gaining skills that will increase earning potential in the future, rather than on immediate financial gains.

05:01

💼 Prioritizing Learning and Investment Over Immediate Earnings

The second paragraph discusses the mistake of prioritizing immediate earnings over long-term learning and investment. It uses the example of a job applicant who values higher pay over the opportunity to learn and grow in a role. The speaker argues that in one's 20s, it's more beneficial to focus on acquiring skills and knowledge that will increase one's value and earning potential in the future. They also advise against saving money in a traditional sense, but rather investing it in oneself. The paragraph touches on the importance of prioritizing expenses towards learning and personal development, automating investments, and avoiding unnecessary spending on non-essential items. It concludes with the importance of living with people who share similar goals and ambitions, as they can provide support and encouragement on the path to success.

Keywords

💡Status Symbol

A status symbol refers to an item, activity, or lifestyle that is associated with a certain level of prestige or wealth. In the video's context, it is suggested that people in their 20s often overspend on status symbols like luxury cars, which may not be financially wise. The script warns against seeking validation through such items when in reality, true status and respect come from personal growth and financial stability.

💡Learning vs. Earning

The concept of 'Learning vs. Earning' highlights the importance of prioritizing personal development and skill acquisition over immediate financial gain, especially during one's 20s. The video emphasizes that taking jobs for the purpose of gaining knowledge and experience is more beneficial in the long run than focusing solely on high-paying positions that may not offer opportunities for growth.

💡Investing in Yourself

Investing in oneself means allocating resources, including time and money, towards activities that enhance one's skills, knowledge, and earning potential. The script encourages viewers to invest in their personal growth rather than spending on fleeting material possessions, as this investment can lead to higher long-term financial rewards.

💡Saving Money

Saving money, as discussed in the video, is not necessarily about accumulating wealth but rather about directing funds towards investments that can grow one's earning capacity. The script challenges the traditional notion of saving by suggesting that young individuals should focus on not spending money on non-essentials and instead use those funds to invest in their future.

💡Prioritization

Prioritization involves arranging tasks or goals in order of importance. In the context of the video, it is about setting aside money for learning and personal development before allocating funds for other expenses. This approach helps to ensure that personal growth is not compromised by other financial commitments.

💡Automating Investments

Automating investments refers to setting up a system where money is automatically directed towards investments at regular intervals. The video suggests that making the process of investing in oneself as easy as possible, while making unnecessary spending more difficult, can lead to better financial habits and outcomes.

💡Impulsive Shopping

Impulsive shopping is the act of buying items without a plan or necessity, often leading to financial waste. The script advises against going shopping without a clear purpose and instead recommends sticking to a pre-approved list of items to purchase, which can prevent unnecessary expenditures.

💡Opportunity Cost

Opportunity cost is the potential benefit that is lost when one alternative is chosen over another. The video uses the concept to illustrate that spending money on immediate gratification, like eating out, may be less beneficial than investing that money in personal growth or saving for future opportunities.

💡Roommate Selection

The choice of roommates can significantly impact one's financial and personal life. The video warns against living with individuals who may have negative influences or habits, such as being irresponsible with rent or undermining one's goals, and instead encourages finding roommates who share similar aspirations.

💡Micro Community

A micro community refers to the immediate environment or neighborhood where one lives. The video emphasizes the importance of living in a community that is convenient, safe, and supportive of one's goals, as this can save time, reduce costs, and provide a conducive environment for personal development.

💡Modeling Behavior

Modeling behavior involves observing and imitating the actions of others, particularly those who are successful or admired. The script advises viewers to be cautious about whom they choose to model their behavior after, ensuring that the actions they imitate align with their own life goals and values.

💡Sequence of Life

The sequence of life refers to the order in which certain life events or stages should ideally occur. The video points out that certain luxuries or behaviors may be appropriate at certain life stages but not others, emphasizing the importance of timing and context in financial decisions.

💡Measuring Financial Success

Measuring financial success in the context of the video is about evaluating one's financial habits and outcomes over time. It suggests looking at how efficiently one can save and invest money, rather than just focusing on the income earned, as a more accurate indicator of financial health.

💡Daily Accountability

Daily accountability involves regularly checking and assessing one's financial situation to stay aware and in control. The script recommends the habit of checking one's bank account every morning to confront reality and make informed decisions about spending and saving.

💡Experience Spending

Experience spending refers to allocating funds towards unique, memorable experiences rather than material possessions. The video suggests that while it's important to be financially responsible, there is also value in investing in experiences that can enrich one's life and create lasting memories.

Highlights

Avoiding the temptation to overspend on status symbols like luxury cars in your 20s can save you from long-term financial consequences.

Pursuing higher education and not just status is crucial for long-term financial stability.

The importance of investing in personal growth and earning potential rather than just focusing on immediate earnings.

The misconception of saving money in your 20s and how it should be invested in oneself to increase earning capacity.

The strategy of prioritizing investment in oneself before spending on non-essentials.

Automating investments and making it difficult to spend on unnecessary items.

Avoiding impulsive shopping and sticking to a predetermined budget list.

The argument for spending money on takeout to save time and increase productivity.

The negative impact of living with the wrong people who may distract from personal financial goals.

The value of a micro-community and living in a convenient location to save time and resources.

Modeling the right life stage and not just mimicking the actions of successful individuals.

Measuring the value of money by the time it takes to earn it, to make more informed spending decisions.

Focusing on saving and investing rather than just making a high income.

Developing the habit of checking one's account daily to confront financial reality and make necessary changes.

The importance of spending money on unique, once-in-a-lifetime experiences during one's 20s.

The potential regrets of not investing in personal experiences that are only possible during certain life stages.

The balance between financial prudence and allowing for life-enriching experiences that create lasting memories.

Transcripts

are 14 massive money mistakes that

people make in their 20s that you do not

want to repeat and this is one of those

don't buy an iPhone buy an Android

[ __ ] like if you make these mistakes

early you will have to pay for them for

years the good thing is that you can

avoid them very easily number one

understanding on education and

overspending on status when you're in

your 20s you probably aren't balling and

the amount of people on Instagram I see

with their check mark that they bought

in front of a Lambo that they would ever

like we all get it they're full of [ __ ]

we understand the people who matter are

not impressed if I were a 200 watch all

the buddies that I have don't give a

[ __ ] the guys who are ahead of you they

want to see you eating [ __ ] living poor

learning and hustling you driving around

in your new rolls or bends or whatever

then you're maxing out all of your

expenditures so you can Flex to other 20

year olds is stupid now you should take

that same money and plow all of that

into your own ability to earn more money

and that's what somebody who's ahead of

you is going to look back and give you

that status and respect for like you can

get status in your 20s from people who

are ahead of you if you're doing the

right stuff if you show that you're on

the wrong path they automatically likely

think they're like he doesn't get it or

she doesn't get it they'll never

associate with you until you understand

the lesson number two taking jobs to

earn rather than to learn and this is

one of the biggest ones we had a

thousand people who applied for a

YouTube editor so for editing videos

like this so we offered somebody very

good pay and the guy said I want an

extra three thousand dollars a year

missing the [ __ ] plot what he didn't

understand was that he was in a season

of learning not a season of earning he

might be able to go somewhere else and

get 30 percent not even three thousand

thirty percent higher the people who are

going to pay that premium are paying the

premium for everything you know and have

nothing to add to you if you're taking

your jobs right now in order to earn

it's not the right season you're trying

to cash in early the earning potential

of you getting extra ten thousand

dollars a year or twenty five thousand

dollars a year in your 20s is so

inconsequential on the long time Horizon

of the skills that you should be

learning right now three is that you

save money that is a mistake hear me out

you want to save money in your 20s but

not actually save it you want to not

spend it or blow it on [ __ ] and you want

to put it into a separate account but

that money you want to invest not the

dollar cost averaging s p or whatever it

is you can do that by all means it's a

great way to like have some money later

but if you want to become Filthy Rich

which is hopefully you know what

motivation is here to do you want to

invest that money into you and your

earning capacity right now you make so

little that that the money doesn't

matter so like if you save 500 a month

if you have a thousand dollars a month

you can put that into the calculator and

look what it's going to be in 70 years

and like cool one it doesn't factor in

inflation so when people see that

they're going to be worth four million

dollars four million dollars in 60 years

is also worth like a million dollars

today think about how much more you'll

get back if you spend ten thousand

dollars this year and then you double

your earning capacity or you triple your

earning capacity instead of saving money

to invest in assets invest in the number

one asset which is you and increasing

your earning potential number four

decide how much you're going to invest

first before you spend money

prioritization comes from taking that's

literally prior it comes first right is

that you take the money off the top and

you say this money has been prioritized

for my learning my education and then

whatever you have left that you can

spend all that money that account you

can let it stock pile up and then you

see something that you want to learn and

then deploy the capital not what do I

have left at the end of the month can I

afford it you've got this big pile of

gold over here that every month you plan

to and then when you when you see the

opportunity you make the decision you

pull the trigger number five automate

the investing and you want to manualize

the space ending you want to lubricate

how easy it is for you to invest in

yourself and you want to make it harder

to spend on [ __ ] that never comes back

to you Dave Ramsey had talked about

people having cash rather than credit

cards you actually feel pain when you

buy things in cash compared to using

credit cards the harder it is to buy

something the less you buy

like the only one even hits your account

is the money that you're allowed to

spend the other money you've already

allocated out to the other thing so I

give you a rent account maybe and then

you've got your personal investing

account SMA you've got your food and

your car money whatever number six don't

go shopping let's be real you don't need

another set of sneakers the idea that

someone says I'm gonna go shopping like

they have no agenda it just means like

I'm going to waste money today stick

with the lists that you already have

pre-approved in terms of your budget

this is my list these are my groceries

this is whatever and if it's not on the

list you don't buy it it's a very simple

habit but that will pay dividends for

the rest of your life number seven get

takeout don't cook your food very

contrarian I know as soon as you make

more than fifteen dollars an hour it

makes more sense for you to work that

day get the take out food and get the

time back it makes more sense

financially most people can like if

you're not being a weirdo you can eat

out for 10 bucks ish a meal and you try

out twice a day is 20 bucks a day 600 a

month maybe if you went to the grocery

store it'd be what 100 bucks a week

versus 150 a week is the net 50 a week

can you not make that up for the meal

prep going to the grocery store cutting

cooking cleaning you're saving the

pennies rather than investing in the

Mega Millions which is you number eight

people live with the wrong people they

have terrible roommates who break things

you go out drinking who are late on rent

like these are all things that'll

distract you from the thing you're

trying to do that's like level one worst

type of roommate above that you've got

people who are responsible Etc but they

want the same goals as you they will

speak over you their limiting beliefs

and they will oftentimes not actually

root for you and they will kind of

undercut you when you're on this path

which is probably different than them

and the thing is in the beginning what

become success looks like failure you're

learning you're not earning they're

already pulling their earning trigger

they're bragging on the fact they make

70 grand a year whatever if you have a

different goal and so never listen to

people who have smaller goals for your

life than you do making sure that you're

living with the type of people who are

trying to do the same thing as you are

in your life will encourage one another

and you guys are kind of like in the

game together that's what will shape the

way you see the world I do think it's

worth living with multiple people in

your 20s because one your 20s can be

lonely but two it's also just a lot

cheaper I lived in a house with seven

people in California and I was able to

only pay 400 bucks a month in like a

nice area which leads to number nine

your micro Community matters a lot I

would overpay for convenience in terms

of being close to stuff close to the

highway so I can get on and off and

right to places I need to close to a gym

and close to cheap places to eat if I

can do those things and ideally if I can

walk to them I save time and gas I get

outside if you live in the middle of

nowhere and it takes you 25 minutes to

get the gym and 25 minutes to go back

there's all this time that gets eaten up

I'm willing to pay a premium to save all

of the ancillary costs that would go

with living somewhere less convenient

less safe I would live with more people

in a better area than fewer people in a

shitty area number 10. since you model

the wrong season of life sometimes

younger guys will look at what I'm doing

they're like oh I'm going to do what

Alex is doing the thing is just like you

don't have the track record and

reputation is built on two things it's

built on what you've done and what you

say you're going to do and having both

of them come true the thing that builds

the reputation is not modeling what I'm

doing now but modeling what I did before

you want to make sure that you model the

right aspect of someone's life at the

right time flying private doesn't make

you rich it means you spend a lot of

money sequence matters number 11 measure

money in how long it took you to earn it

let's say you make 20 bucks an hour if

you want to go buy a shirt for 100 bucks

you have to think to yourself okay I

make 20 an hour 20 payroll tax I'm

actually gonna have to work six hours to

buy that hundred dollar shirt with tax

whatever so if someone said I want you

to work all day and I'll give you this

shirt would I do it probably not I

worked at Smoothie King wait I was 15 15

years old seven dollars 25 cents an hour

a six hour shift right so I was making

43 bucks people would go next door I

remember noticing this and they would

spend 15 bucks on lunch I was like so

you have 36 dollars after taxes for

coming to work today and 15 of that is

you going to lunch next door so you're

working six hours for 20 bucks number

12. get competitive with money around

what you're saving not what you're

making so I told you this is a season of

learning not season earning to know what

you're going to learn you have to budget

towards your investment rather than

thinking I'm making five thousand

dollars a month and spending five

thousand dollars a month meaning I'm

profiting personally zero say I'm saving

twenty five hundred dollars this month

to invest in me I've had people who I

know I've been making hundreds of

thousands even millions of dollars a

year and have nothing they blew

everything and so make your PR your

personal records around what you're able

to put into that bank account every

month number 13 check your account every

single morning until I started doing it

I stayed poor I didn't want to look at

my bank account because it would hurt my

feelings seriously I just I look at it

and I would just feel poor but that's

okay you have to confront reality in

order to change it man money's pouring

out of this thing left and right once I

got a pulse on it I knew Tuesdays when I

paid this Thursdays is when I pay for

this it's a habit that once you learn it

it's hard to forget and I promise you

just like losing weight if you get

someone to measure the weight every day

get someone to measure the bank account

every day it'll improve number 14. what

is it okay to spend money if there's one

thing that I probably could have done

better is I could have spent money on

one-time experiences and what I mean by

that is not going to the club and

popping bottles going to Europe and

doing a you know sleeping in hostels for

three months that's a cool experience

that you're not going to be able to do

when you're 40. we're just not going to

do it so there are times of Our Lives

that are optimal for certain types of

experiences in those windows closed and

so if there are experiences that you can

only do in your 20s I wholeheartedly

support them but you want them to be

things that when you're 80 you're proud

of giving yourself permission to spend

on an experience in a limited fashion

you want to drain your entire investment

account right you want to go see the

grand Canyon for three days go to the

Grand Canyon if there's some things that

like are a little unique to you I think

these are the times that you can do that

and it's worth spending the time of the

money to do it even if it's not

financially makes sense because at the

end of the day like you're gonna die

it's not gonna matter anyways