4 Money Mistakes I Made in My 20s That Have Cost Me Thousands

I made some poor financial decisions in my 20s. See what I would do differently so you can avoid making the same mistakes.

Everyone makes mistakes -- it's only human. Personally, I made plenty of money-related missteps throughout my 20s. But I learned from them and have since made different choices in my 30s. Here are four money mistakes I made in my 20s that have cost me thousands of dollars, and what you can do to avoid them.

1. Not starting an emergency fund sooner

An emergency fund is a powerful financial tool that can help you get out of stressful situations more easily. I didn't have an emergency fund until my late 20s. From car troubles to unexpected vet bills, I caused myself a lot of added stress by not having emergency savings.

Without extra money set aside, I had to use my credit card for several significant expenses. Luckily, I knew the importance of paying off as much of my card balances as possible. But I did still incur some credit card debt from interest charges.

If you don't have an emergency fund, I urge you to start one right now. Even a small fund can be helpful when you need money unexpectedly. Here's how to get started:

• Open a savings account that is separate from your regular bank account.
• Automate your savings with weekly or monthly transfers.

Even if you can only afford to save $25 a week, it'll add up. After one year, you'll have $1,300 saved. Use our emergency fund calculator to find out how much you should save.

2. Staying in jobs with low pay and little benefits (that I hated!)

I'm guessing most people have worked jobs they hated. In my 20s, I had more than one job like that. They all had the same issues in common: low pay and little to no benefits -- and they were of zero personal interest to me.

If I'd made job changes sooner, I could have earned more money and improved my quality of life. I've been freelancing for over five years now, and it's one of the best decisions I've made. While freelancing may not be for everyone, it is for me.

Now I look forward to the work I do. And I'm in control of my income potential -- I can take on more or less work as needed. I also control my schedule, and in doing so, I choose to prioritize travel and time with family.

When you have bills to pay, you may have to stay in a job you dislike. But don't stay there forever if you can help it. Maybe there's a class or certification you can explore that can boost you into a job you're better suited for. Don't be afraid to do things differently than the norm. Finding a better career fit may improve your happiness, mental health, and financial situation.

3. Not using credit card rewards sooner

I love credit card rewards. I now use multiple cards to rack up rewards on my regular spending. But there was a time when I didn't use this type of card at all.

I got my first credit card before starting college to learn how to build my credit. After a couple of years, my hard work paid off and my credit was in great shape. At that point, I definitely could have been approved for a rewards card. Instead, I missed out on the chance to earn rewards on my grocery spending, take-out and dining purchases, and other life expenses. It's hard to say exactly how much I lost out on, but I estimate I could have earned at least $5,000 in rewards if I'd started using rewards credit cards sooner.

4. Not maxing out my Roth IRA contributions

This one hurts the most. I opened a Roth IRA account in my early 20s, after graduating college. At that time, I somewhat understood the importance of saving for retirement. I also had some understanding of compound interest. By starting early, I could let my money grow more quickly over a longer period of time. But I wasn't making much money in my early 20s.

In the first few years, I couldn't afford to max out my contributions. But in my mid to late 20s, I should have adjusted my spending habits to make it work. I missed out on a lot of money growth by not contributing as much as possible. If I could go back and re-do things, I would have maxed out my contributions to reach the annual contribution limits every year, even if it meant fewer fun nights spent out with friends.

Now I'm maxing out my contributions to my Roth IRA and have been doing so throughout my 30s. But I estimate that my mistake cost me, at minimum, $25,000. And that's only the value of contributions I didn't make. It doesn't include potential interest growth. (Knowing that figure would upset me more!)

Mistakes happen, especially with money. But we can learn from them and make smarter choices as our situations change. I regularly write and read about personal finance topics, but I'm always learning. I adjust my financial habits to match the knowledge that I've gained, and you can, too.

No matter where you are in your financial journey, I hope you can learn from my money mistakes -- and set yourself up for better financial success.