5 Reasons why folks will stay broke in their 20s

I’m almost 30 and I’ve been writing about money for almost a decade. I’ve seen friends become highly successful. I’ve also seen friends remain in the exact same situation. A lot can happen in your 20s. You’re reading this because you want to have a better life. You want more happiness and adventure. You want less stress and debt. You don’t want to turn 30 and wonder where all of your money went.

Why you're going to be broke

Why are five reasons that many people will stay broke in their 20s?

1. Education.

“An investment in knowledge pays the best interest.” — Benjamin Franklin

When you’re young, wiser relatives will tell you how you need an education. Then you’re kind of left in the dark as you struggle with student loans and picking the right program.

There are three issues here when it comes to education and being broke:

  1. No education. You didn’t acquire any skills in your 20s and now you’re wondering why you can’t get ahead. You don’t have the credentials to increase your income.
  2. Too much education. You can also stay in college for too long. It’s fun to stick around and take different courses. You get to avoid the real world. The problem is that it’s difficult to make money if you’re always a full-time student. You also can’t save any money if you’re funding your education through loans.
  3. Not using the education. You earned an education, but you don’t know what to do with it. This is actually the most common scenario from what I’ve seen. It’s easy to let the time pass you by as you put off your next move.

What can you do?

Figure out which situation you’re in.

  1. If you don’t have any education or enough education, you need to make some changes right away.
  2. If you have too much education, it might be time to focus on one career path.
  3. If you’re not using your education, it’s time to start applying for jobs in your field.

It’s time to take the next step. Don’t let education hold you back.

2. Excuses, excuses, and even more excuses.

I have friends who have been giving me the same excuses for close to a decade now. I can’t stand it. I don’t even acknowledge their plans anymore. I try not to be rude. I usually just nod my head and try to be a good friend. You really don’t want to lose friends over pointless arguments. You can also tell when someone’s serious about their plans.

You need to stop making excuses in these two very specific areas:

  1. Stop making excuses for everything that you buy.
  2. Stop making excuses for everything that you don’t do.

The sooner you start taking accountability of your life, the sooner that you can make progress.

Excuses typically apply to these scenarios also:

  • “I need to buy a house.”
  • “I need a big wedding.”
  • “I need to buy a new car to get to work.”
  • “I’ll start saving money when I make more money.”
  • “I want to enjoy my life. I’ll save money later.”

This one’s a bit too vague, so I’ll go into more detail with the next point…

3. Waiting for some magical moment.

“I’m going to get serious about my finances soon.”

I’ve heard this from friends for years. I don’t even pay attention or try to argue because I don’t want to come off as a jerk.

What are you waiting for? Nobody’s coming to save you. You won’t experience some magical moment as the sky opens up one evening.

What can you do?

Accept that every solution’s available to you, start tackling one at a time, and ruthlessly work towards your desired result.

  • Launch that side hustle.
  • Go to your payroll department and ask for automatic deductions.
  • Find out how much you actually owe on your credit cards.
  • Say no once in a while to dinner plans.
  • Create a freelance income to help you save up.

Track your spending tomorrow. Track your spending for the next few weeks and see where you’re blowing your money. Have a sense of urgency and start right away. Stop waiting around.

4. Only relying on one source of income.

Your first job after college will be fine. Enjoy it and create some memorable experiences. Chances are that you’ll make a few lifelong friends.

The thing is that you can’t rely on your first job to guide you for the rest of your life. You also can’t rely on one source of income. It’s easy to be broke when you only have one source of money coming in.

What can you do?

  1. Find a part-time job.
  2. Freelance for extra money.
  3. Ask for a raise.
  4. Start a blog.

Gone are the days of working in one job until you retire. Some of us even had a situation where only one parent worked. Now both parents sometimes have two jobs. It is what it is. You can’t complain about how broke you are if you never do anything to increase your income.

5. Love.

“Love conquers all things except poverty and toothache.” — Mae West

Nobody wants to write about this as it’s a pretty taboo topic in the personal finance world. Many financial writers are married and see no other way. Those that are divorced don’t really talk much about the consequences because they don’t want to invite the negativity that the topic brings.

I have friends who are always buying drinks and spending their paychecks on pursuing love.

Then there are those people who stop everything that’s going on in life to pursue a new partner. They meet someone and they disappear. They forget about all of their goals. They only care about sharing relationship memes. The relationship ends and they’re back to where they started.

How will love make you go broke in your 20s?

  • Divorce. I’ve seen far too many people around me get divorced within the first year of marriage. I’m not judging because I’ve never been in this situation.
  • Always courting. Well, I can’t be a hypocrite here.
  • Chasing love. I’ve heard that flowers can be pretty expensive.

What can you do here?

You always have to do what’s best for you. I know that your parents are pressuring you to get married and give them some grandchildren. You can’t stop pursuing your goals. You can’t drop everything in your life whenever someone new comes along.

Those are the top five reasons why most folks will be broke in their 20s. Chances are that you’re making at least one of these mistakes. That’s okay.

I don’t want you to be broke through your entire 20s. These are supposed to be the most exciting years of your life. You also want to enjoy your 30s without feeling regret for ending up broke.

4 thoughts on “5 Reasons why folks will stay broke in their 20s”

  1. Awesome article. You make a great point about too much education. I know some people who kept prolonging their schooling because they were afraid of the real world.

  2. I completely agree with your points. Many of my friends say they are young so they will just save when they are older. I wish they understood the power of compounding over time!

  3. Jeff | VTX Capital

    The additional streams of income is life-changing, that’s for sure. It’s really good when you have the knowledge and begin pursuing multiple income streams earlier rather than waiting until money is tight.

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