MONEY MISTAKES I MADE IN MY 20'S
Over the past few years I've massively changed my relationship with money, by spending less and saving more, and this led me to reflect on decisions I made in the past that were in hindsight, mistakes. I thought I would share my thoughts and reflections with you on the money mistakes I made in my 20's.
Since my mid-twenties I've been reasonably sensible in that I always ensured I had some savings in the form of a small emergency fund - but anything else I had above that was fair game and could be spent on anything I wanted - and spend it I did! Mainly this was spent on clothes, particularly clothes for nights out or glam dresses for work; and whilst I don't regret any amount of fun I had, or time spent with friends, I could have bought just half the clothes I did, still had a fabulous wardrobe and had no less fun. But I would have had a lot more savings!
NOT TRACKING SPENDING
I probably could have stopped my careless spending in it's tracks by simplytracking what I was spending, or even by setting myself a budget. I really think if I had tallied up each month how much I was spending in each area - particularly on things like clothing - I would have stopped buying so often. When I look through my belongings now, particularly my wardrobe, and tot up the cost, at times it makes me feel a little queasy knowing how much better that money could have been utilised. KNowing where your money drains are can be such a revelation, and it's vital to know where your money is going if you want to plug the drain.
When I moved into my first flat I think I was earning in the region of £22,000 a year, and about a year or so later, thanks to a few savvy career moves, I was earning about 30 percent more and yet had no further savings despite my basic outgoings barely increasing. This is a perfect example of lifestyle inflation, I had simply bought nicer things, more expensive thing, and simply more things instead of saving or investing that salary increase. I suppose it's what a lot of people call 'Keeping up with the Jones's' - that feeling that the more you earn, the better car you should have, the nicer house you should have, the better clothes you should have to keep up with your peers, sort of an outward proof of success. Had I kept my spending at the level that my smaller salary allowed, I could have had a lot more savings without detracting from my lifestyle at all.
NOT HAVING FINANCIAL GOALS
This is probably the biggest mistake I made and one I was continuing to make until the last few years. Having a financial goal can be absolutely transformative and in many ways can take care of other mistakes, because having a goal that means something to you will help stop spending carelessly.
Since I set myself a financial goal of saving for a deposit for a potential house purchase, I've shocked myself at how much I've managed to save, sums I would never have thought possible on my salary. Had I had a financial goal back in my 20's, even something as simple as simple as saving just £350pm - between the age of 25 and 35, I would have saved in the region of £42,000! That sort of money would have come in very useful!
NOT CONSIDERING MY FUTURE SELF
I think a lot of this comes with just being young, living for the moment, and I had had a few people I knew sadly pass away quite young so I think that that somewhat influenced me into not thinking too far into the future and to live for the here and now. But I think I could have had a better balance.
A lot of the time now I think of my future self when it comes to money - and I don't just mean retirement funds - although lets face it, it wouldn't be the worst thing in the world! But if living through a pandemic has taught us anything, it's that anything can happen and you cannot predict the future. I might have children in the future and want to take a few years off work whilst they are small - savings could make that happen. I could find myself ill and unable to work for a period of time, savings would certainly help then.
Even when I think of my current situation, where I'm trying to save in the hopes of purchasing my own home - back in my twenties, we'd had the global financial crash and mortgages were difficult to secure and it all just seems a bit pointless. But as noted earlier, had I just saved a relatively small amount each month, knowing that things and circumstances change in time, that would have made a huge difference to me now.
So overall, looking back at my twenties, I wish I had just taken a little more interest in personal finance and saving, educated myself a little more - which is something I have done in my thirties - but if I had done it just a little earlier, saved consistently a little sooner, even just a small manageable amount, it would have but me in a much better position now.