Financial red flags in your 20s

Your twenties are a time of exploration – learning about the world and where you fit into it.

While taking it all in as a responsible young adult, you’ll want to also keep an eye on your financial habits. This is a period in the lives of many where bad habits are learned that can carry on for decades, derailing life goals and major milestones.  

The biggest red flag of them all has to be living off credit cards. Lots of young people get sucked into carrying medium-to-large balances on their credit cards, which ends up costing them more money in interest than they would ever fathom.  

Not having an emergency fund is another red flag to watch for. If you’re living paycheque to paycheque, try grabbing a weekend job for the summer, or doing some piecework on the side to establish some savings. Once you get started, it gets easier! 

As you get older, wiser, and more experienced, typically, better-paying jobs start to come your way. While progressing in your career, don’t let lifestyle inflation creep in. This red flag comes in the form of extra expenses, such as new gadgets, nights out, or expensive cars, all of which basically cancel out your newfound income.  

One way to avoid lifestyle inflation is by budgeting. Being deliberate about how you spend your money and where it goes once it comes into the home makes a world of difference in your financial health. Not having a budget is a major red flag in your mid to late 20s, and even more so later on in life. Don’t be afraid of making a budget! 

Lastly, something many people do in their 20s is defer retirement savings. It’s easy to think you’ll have time later on to plan for retirement, but it catches up to you much quicker than you’d think, and properly saving for it takes a long time.  

Remember, you are the captain of your own ship, and a good captain learns how to do the job right from the get-go and continues to do it right into the future. Don’t let yourself fall into some of these bad habits that will negatively affect you later in life. 

If you have any questions about starting your savings journey, don't hesitate to reach out to us.