4 Savings Mistakes I Made in My 20s (And How to Avoid Them)

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page. APY = Annual Percentage Yield

KEY POINTS

  • Most people make plenty of mistakes in their early adult years -- especially financial mistakes.
  • Financial blunders like only saving the bare minimum and keeping too much extra money in your checking account could cost you money.

Financial mistakes made in your 20s could impact you later in life.

No matter what season of life you're in, it's a constant learning experience. During my 20s, I learned a lot -- by making plenty of errors. At that point in my life, I had some general knowledge regarding financial matters, but I didn't always make the best financial choices. Learn from my savings mistakes, so you can take steps to avoid them.

1. Saving the bare minimum

I've always been a saver. Luckily, I established this habit early in my life. In my 20s, I saved some of my income for emergencies. However, I didn't save as much as I could have -- so I wasn't always financially prepared when the unexpected happened.

My income was lower at this stage of my life, so my savings potential was limited, but I wish I had cut out some of my unnecessary expenses and made saving more of a priority. I've never been a big shopper, but I could have spent less money dining and going out with friends and put more into savings.

Featured offer: save money while you pay off debt with one of these top-rated balance transfer credit cards

If you're still in your 20s, have fun and spend money on yourself -- but don't have so much fun that you neglect your savings goals.

2. Not automating my savings contributions

While I saved some money in my 20s, I didn't do so regularly.

If I had automated my savings, I would have been more consistent. If I had committed to saving a small amount of money each week through automatic transfers, I likely would have saved more.

In my 30s, automatic savings are a must. I feel less stressed knowing that my savings are a priority. By automating the process, I never forget to save or make excuses, and it's fun watching my savings account balance grow consistently.

3. Keeping too much money in my checking account

Another mistake I made was keeping too much money in my checking account. I was never the girl with only $2.75 left in her account the day before payday -- even when money was tight.

I felt safer keeping more money than necessary in my checking account. But I missed out on the opportunity to earn more interest by transferring some of that extra money to my savings account.

It's a good idea to keep some extra money in your checking account as a buffer -- but don't get into the habit of stockpiling all of your savings there.

4. Not paying attention to APY

In my early 20s, I understood the importance of having a separate savings account, but I didn't pay much attention to the annual percentage yield (APY) offered. I opened an account at my local bank because it was simple, and I kept that account for several years.

Luckily, I paid more attention to APYs and opened a different savings account in my late 20s. If I had done so sooner, I would have earned more interest from my savings contributions and had an even bigger emergency fund available.

Pay attention to the APY as you compare bank and account options. High-yield savings accounts can help you maximize the interest that you earn.

We all make mistakes -- it's part of being human. But by learning from others' mistakes (like mine), you can set yourself up for better financial success.

Check out our personal finance resources if you're looking for tips to make the best money moves.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

Two of our top online savings account picks:

Rates as of Apr 12, 2024 Ratings Methodology
Advertisement
SoFi Checking and Savings Western Alliance Bank High-Yield Savings Premier
Member FDIC. Member FDIC.
Rating image, 4.75 out of 5 stars.
4.75/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.50 out of 5 stars.
4.50/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor

APY: up to 4.60%

APY: 5.36%

Min. to earn APY: $0

Min. to earn APY: $0.01

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow