14 Money Mistakes to AVOID in Your 20's
Summary
TLDRThis 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
- π± 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.
- π 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.
- π° 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.
- π¦ 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.
- π Automate your investments and make it harder to spend on non-essential items to ensure that you're consistently investing in your future.
- ποΈ Avoid impulse shopping and stick to a budget; having a clear list of what you need can prevent unnecessary spending.
- π½οΈ 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.
- π« Choose your roommates and social circle wisely; being around people with similar goals can encourage and support your financial and personal growth.
- π 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.
- πΆββοΈ 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.
- π°οΈ 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.
- πΉ 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.
- π Make it a daily habit to check your bank account to stay aware of your financial situation and to confront any issues head-on.
- π 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
π± 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.
πΌ 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.
Mindmap
Keywords
π‘Status Symbol
π‘Learning vs. Earning
π‘Investing in Yourself
π‘Saving Money
π‘Prioritization
π‘Automating Investments
π‘Impulsive Shopping
π‘Opportunity Cost
π‘Roommate Selection
π‘Micro Community
π‘Modeling Behavior
π‘Sequence of Life
π‘Measuring Financial Success
π‘Daily Accountability
π‘Experience Spending
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
[Β __Β ] 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 [Β __Β ]
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
[Β __Β ] the guys who are ahead of you they
want to see you eating [Β __Β ] 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 [Β __Β ] 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 [Β __Β ] 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 [Β __Β ] 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
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