The 6 biggest money mistakes in my 20s taught me the spending lessons I live by in my 30s

young woman buying makeupsturti/Getty ImagesThe author is not pictured.sturti/Getty Images

Like most people in their early 30s, I made my fair share of financial mistakes in my 20s. From taking on debt to making emotional financial decisions, I did a lot of things wrong. However, I learned from my mistakes and am better for it today. Here are some of the worst money habits I managed to break by age 30.

1. Emotional spending

After being broke in my early 20s, I fell into a comfortable financial situation in my later 20s. I had a full-time job with benefits and a side hustle that produced substantial income. My student loans were paid off and for the first time in my life, I was financially secure. But I didn't feel any different ... until I started spending.

On some level, spending money made me feel like I had money. The nice things I bought became physical manifestations of my success. There's also something comforting about buying things and knowing you can pay off your credit card at the end of the month. So I started doing that and seeing my disposable income dwindle.

 

Eventually, the thrill of buying things wore off and I realized I needed to find another way to put my income to good use and still feel like I was reaping the rewards of my hard labor. I began investing my income, contributing more to my 401(k), and restricting purchases to essentials only.

2. Pointless shopping

In my 20s, I spent quite a bit of time shopping online, just to pass the time. I'd watch YouTube videos of 19-year-old beauty vloggers extolling the virtues of products they received for free and found myself thinking, "It sounds totally reasonable to own nine mascaras." I'd read listicles in my free time and wind up with boxes of pointless tchotchkes arriving after late-night ordering sprees on Amazon.

The solution? No more shopping. I canceled my Amazon Prime account and decided firmly that I would not buy any more beauty products until I had used up my existing stash.

I also took a more strategic approach when it came to shopping for necessary items. I made a spreadsheet of all the essentials I needed throughout the year (i.e. shampoo, soap, sunscreen, etc.). Then I took an inventory of what I already had and decided the next time those items went on sale, I would bulk up to last me the rest of the year.

I saved hundreds of dollars through sales, mobile app deals, and even AmEx Offers. In limiting myself to buying only the essentials, in bulk, I curtailed my impulse-shopping habit and saved hundreds of dollars on necessities.

 

As far as clothing goes, I have a hard and fast rule: The only way something new gets added to my closet is if an equivalent item goes out. This has freed up closet space and prevented the acquisition of more things I don't need.

3. Not investing in my health

During a particularly stressful period at work, I gave up on afternoon dessert runs in favor of Pilates. That $15 I'd spend sugaring up to make the day more bearable was much better spent working out for an hour. I felt physically stronger and mentally better equipped to handle stress. I found investing in my health to be a great alternative to retail therapy. It was a small luxury that paid off tremendously in the long run.

4. Not tracking my spending

Like many 20-somethings, I had delusions about my financial situation. One of those delusions was that I didn't need a budget because I was perfectly frugal. The fact that I didn't have much left at the end of the pay period was because I wasn't earning enough, not because I was spending unnecessarily.

I started writing down every single item I purchased for a week and began to cringe. Two daily coffee runs, a daily breakfast sandwich, $20 lunches, and sometimes a drive-through dinner really added up. I was spending at least $40 per day just eating out unnecessarily. Of course, I told myself it was OK to spend more in this category because I was so frugal when it came to everything else. But as the pile of Amazon Prime boxes on my doorstep demonstrated, that wasn't true either.

I started using the Mint app to track all of my credit card spending. This would allow me to keep an eye on my purchases, without forcing them all on one credit card. Being able to maximize my spending by taking advantage of credit card category bonuses is an important part of my point-earning strategy. Mint helps me stay on top of that.

5. Terrible (and wasteful) eating habits

The first step I took was to cut out my daily $7 breakfast sandwich. Instead, I opted for a healthier cup of overnight oats. It was cheaper, tasted great, and gave me much more energy throughout the day.

My twice-daily iced coffee habit was neither satisfying nor healthy. More than once, I'd pick up a venti iced coffee and toss it after a few sips because it tasted acidic that day or the ice melted and watered down the coffee too much. The solution? I started buying 32-ounce bottles of Starbucks cold brew and a bottle of sweet cream, leaving them in the fridge at work. I got my daily coffee fix at a fraction of the price.

 

I still spend $15-20 on lunch most days, but the drive-through dinners were pretty easy to cut out once I made healthier eating choices during the day. Besides, when you have a 6 PM Pilates class, the last thing you want is to eat a 1,000-calorie meal. My food costs were cut down significantly without negatively impacting my health or happiness.

6. Not setting goals

Lastly, I realized most of my financial problems in my 20s stemmed from not having goals. Sure, I was determined to pay off my student loans, but having graduated in the midst of a recession, buying a house was not on my to-do list and the idea of saving for retirement (to see it go up in smoke) was not a motivating thought. Once I began setting goals for myself, I had something worth saving for.

One great tip I received was from a blogger who recommended creating a separate savings account and naming it based on what the funds would be used for (i.e. "vacation," "home," "business," etc.). Giving the account an actual name correlating to its purpose helps curtail the temptation to move funds out. Because you're no longer just moving money out of your savings account, you're deducting it from your vacation fund, your renovation stash, etc.

At one point, I got some bad advice: "Don't spend less. Make more!" That's a great way to completely burn out and not enjoy your life. Human wants are endless but the capacity to fulfill them is limited. So rather than working harder to pay for those iced coffees and pointless products I tossed away every day, I decided to spend less (and smarter). The end result was less waste and a happier, more balanced lifestyle.

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