6 Money Mistakes I Made in My 20s


Photo by Miles Burke on Unsplash

I'm only two years away from being the ripe old age of 30, and it's hard to believe that I'm close to passing another decade of my life. One of the biggest concerns in life throughout my twenties has always been money.

I can't tell you how much financial stress I went through during my first few years out of college. My first post-graduation job was working as a part-time blogger at $11 an hour before taxes. It wasn't the most impressive income, but I loved that job.

About a year later, I moved into an administrative assistant job that wasn't much more than a fancy receptionist. By then, I was earning $15 an hour even though the work was soul-draining and miserable.

There was one Friday afternoon in December that changed everything for me. It was almost 2018, and I was going to be 26 years old. The thought of it crushed me. I spent so many years working meaningless, low-paying, and dead-end jobs that I began to question myself.

This wasn't who I wanted to be at all. This wasn't the life I imagined when I graduated from college. I saw many of my peers living successful lives in fulfilling careers, and here I was, working an entry-level job and living with my family. I couldn't help but feel a tinge of embarrassment whenever I met an engineer and had to explain that I answered phones for a living.

What was I doing with my life? How did I end up here? How much longer would I have to live like this?

It was then that I decided to get serious with money. I didn't have a plan, but I know I needed to do something. I couldn't live like this forever.

I spent the next few years learning as much about money, productivity, and self-improvement as possible. Hell, I'm still learning. I want to improve myself to escape a life of unfulfillment and mediocrity.

My journey is far from over, but I've learned quite a bit. Some of the most valuable lessons came from the mistakes I've made.

Here are a few mistakes that I learned, so you don't have to:

1. Not Having a Post-Graduation Plan

College was probably the best four years of my life. After the misery known as high school, going to college was a very welcome change. I attended Chaminade University of Honolulu, where I met plenty of friends, some of which I still keep in touch with.

However, I didn't know what I wanted to major in. When I was younger, my dream was to become a movie director. Hell, I still dream about it to this day. But reality hit me like a brick, and I realized I needed to get a more practical job.

My dad suggested I major in Business since it's a flexible degree. Many Business majors go onto have careers in marketing, finance, human resources, or project management. I ended up in none of those fields.

In all fairness, my major did help me land my first blogging gig. My boss told me his goal was to make our website into the next Business Insider (which obviously never happened). I suppose having a $120,000 Business degree somewhat helped me land that job, but it hasn't done much else since.

Unfortunately, my story isn't that uncommon. Over 40% of graduates end up with jobs outside of their degree, according to a report by the Strada Institute for the Future of Working and Burning Class Technologies.

The study found that 50% of Education majors start out their career underemployed – working in a job that doesn't require a degree – the highest occurrence of any field. Business and Marketing majors like myself, came in second place at 47%.


Source: The Strada Institute for the Future of Work and Burning Glass

If I could do it all again, I'd probably go for computer science. It's hardly my dream job, but I live in the Bay Area, where tech dominates the market and drives up the rent. It certainly would've been a better investment than my Business major.

2. Not Taking a Job Opportunity When Given the Chance

You've got to live life with your best interests in mind. Do what will work out in your favor.

That's something I wish I did when first presented with a glorious job opportunity. At the time, I was still at my blogging job, working three days a week, and making $11 an hour. It wasn't much, but I loved my job because it gave me the freedom to write. I'd always loved writing, and I was thrilled to be getting paid for it.

I remember getting a call from a recruiter I'd worked with. She told me she had a temp-to-hire administrative job that could pay me $40,000.

When I first got out of college, my goal was to get a $40,000 salary. It seemed like so much money at the time. It was certainly more than I'd ever earned back then. Now, here was a golden opportunity right at my fingertips.

So, what did I do? I turned it down without so much as a second thought.

"Thank you, but I'm not looking for a job at the moment," I told the recruiter. "I really like the job I'm working now."

Years later, I'm still regretting that decision. I'm not sure what that new job would've been like, but the blogging job was a dead end. I ended up having to change roles less than a year later because we got no traffic, and our advertisers pulled out. The company cut my position, and I switched to an administrative assistant to keep working.

It wasn't much longer until the company cut the administrative assistant job too, and I got laid off.

To this day, I have no idea how the other job would've worked out, but it couldn't be as bad as the one I had.

3. Not Negotiating for Higher Pay

Negotiating for higher pay is perhaps the only reliable way to earn a few extra thousand dollars in ten minutes or less.

Only 39% of people negotiate their salary, according to a Robert Half study. Not negotiating could mean you miss out on an additional 13.3% of salary – roughly $7,500 for the average American.

I've only negotiated my salary twice throughout my career. The first time was when I was an administrative assistant and asked to get $20 an hour instead of my $15. (That would bring my earnings to about $40,000 annually.) My boss said he'd talk to the CEO. He later told me that the CEO denied my request and that he wasn't too sure about my future at the company. Not surprisingly, I got laid off a few weeks later.

The second time I negotiated my salary was when I accepted an office manager role. My boss initially denied my offer and told me I should be happy with the multiple benefits the company offered. A few hours later, she got back to me and said that she could give me a raise of $2,250.

It was the easiest $2,250 I'd ever earned. It made me wish I'd been more forward about negotiating salary at my other past jobs. Imagine how much extra money I'd have in my bank account if only I negotiated first.

4. Not Investing Earlier

I'd always had half a mind to start investing ever since I started college. I'd long been fascinated by the stock market, but never knew much about it.

My dad has long since retired but still pays close attention to the market's daily ups and downs. He now sits comfortably with a gigantic Roth IRA that will keep him living comfortably for the rest of his life. He even helped pay for my college tuition by selling Netflix stock.

I wish I had just a little more curiosity a few years earlier, as I didn't get started until my mid-twenties. It's still a pretty young age, but I wouldn't have minded getting money in the market just a bit sooner. If only I would've been much happier right now if I'd only put in a few extra dollars.

I always say that time in the market is better than timing the market. The sooner you start investing, the better off you'll be. Stock prices generally rise over time, so it's best to get in early.

A NerdWallet analysis found that if a 25-year old millennial put 15% of his annual salary ($40,456) for four decades, he'd retire with $3.3 million. The hypothetical investor only had to put down $563,436 to earn it back nearly six-fold.



Photo by Patrick Weissenberger on Unsplash

5. Investing in the Wrong Companies

When I first began investing, it felt like I was exposed to an entirely new world. I could choose any publicly traded company in the world and make boatloads of profit when the price went up.

I imagined how great it would be to find a hidden gem that would later skyrocket in price. I figured that stocks like Amazon and Google were too pricey to get into, so I should try my luck with small-cap stocks that I could buy by the dozen. I ended up buying a lot of different companies based on random news, Motley Fool recommendations, or extraordinary dividend yields.

These stocks include Meredith Corp, Cenovus Energy, China Yuchai, Sirius XM, Yelp, CorEnergy Infrastructure, and Pandora Media. I also purchased many niche ETFs centered around marijuana, utilities, ESG, emerging markets, and specific regions (Germany, Sweden, Hong Kong, etc.).

I'm not saying that any of these are bad stocks to own; I made money on quite a few of them. But it's hard to think that those stocks were better picks than index funds or FAANG stocks. Even Warren Buffett believes that most investors can't beat the market and should buy index funds instead. Who am I to think that I'm better at picking stocks than the professionals?

Plus, I was wrong about Amazon and Google. Back in January 2019, Amazon was $1,575.39, and Google was $1,070.71. They've gone up even higher since.

Picking stocks is a lot of fun, and I still do it, but I'm more careful about it. I've had a few big winners like Shopify, but most other purchases haven't fared as well. My point is this: do your research before buying. I impulsively bought too many companies that ended up underperforming compared to the market.

6. Getting Too Greedy (FOMO)

"The greatest enemies of the equity investor are expenses and emotions." – Warren Buffett

We'd all invest like robots in an ideal world, and nobody would become too greedy or cautious. But humans are emotional creatures, and money especially influences how we feel. We all love gaining money and hate losing it. These simple emotions often cause us to act irrationally. That's why people buy during market tops and sell at bottoms.

My greed has proved to be my undoing. On the one hand, I could argue that greed got me to put money in the market in the first place. On the other, I made one to many bad investing decisions due to over-eagerness.

I already mentioned my history of less-than-stellar buys. Still, those weren't nearly as painful as when I lost over $5,000 from short selling. Near the pandemic's beginning, I made a few hundred dollars by shorting Delta Air Lines and Marriott International. I got so excited that I wanted to short more stocks and make more money. Unfortunately for me, those prices went up, not down.

I made a similar mistake back in January 2018 when I first got into cryptocurrency. I transferred $1,000 into Coinbase and bought a few fractions of Bitcoin, Etherium, and some altcoins. Then, it all came crashing down.

Bitcoin was worth around $17,000, and Ethereum was worth approximately $1,000. Now, Bitcoin is around $8,800, and Etherium is about $200.

Luckily, I was cautious back then. I only put in money I knew I could lose. Hell, I didn't even invest the full $1,000, and I'm thankful for it.

I should've taken a similarly cautious approach to short selling. If you're doing something risky, start out slowly and don't put in more than you'd be comfortable losing.

Conclusion

Everybody makes mistakes, but the important thing is to learn from them. Most of these mistakes are painful to think about. I still kick myself for not having the necessary foresight to avoid them. However, there's nobody that I can think of who became successful without enduring tons of failure.

James Dyson made over 5,000 vacuum cleaner prototypes before creating one that worked. Now, he owns one of the biggest vacuum companies in the world and is worth over $6 billion.

Thomas Edison also famously failed a lot as it took him over 1,000 tries to create a lightbulb successfully. (The exact number of failures varies.) Now, Edison is a household name, and almost everyone in the world uses his invention.

Hopefully, anyone reading this will learn from my mistakes, so they don't also make them.

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