"With age comes wisdom." "Experience is the best teacher." "You have to fall down to learn how to get up."

Regardless of which of these adages you prefer, the message is generally the same — facing challenges is a great way to learn, but sometimes those lessons can be painful. This is especially true for younger people as they start to manage money on their own.

We're here to help you learn the importance of responsible money management. Let's take a look at the most common mistakes young people make when it comes to managing money.

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Money Mistake #1: Failing to Save for Emergencies

When you're managing your money on your own, you need to see the whole picture. This may be the first time you have regular income, and it's fun to be able to buy things without having to ask your parents for permission. But it's critical to start saving responsibly in your 20s, because it sets you up for success down the road.

The harsh reality is that something unexpected can happen at any moment. Your car may need a critical repair, or you may lose your job. The people who save aggressively and build up an emergency fund to cover the absolute necessities, like bill payments, rent, and groceries, are the ones who weather the storm.

A good rule of thumb: Aim to have enough saved to cover at least three months of essential living expenses. Start by saving 10–20% of each paycheck in a dedicated savings account, and don't touch the funds until an emergency arises.

If you need to open a savings account, we offer several options to help you develop your savings strategy.

Money Mistake #2: Racking Up Credit Card Debt

Credit cards can provide convenience and may help you build credit when they’re used responsibly. The risk comes when card purchases feel separate from the money you’ll eventually need to repay.

If you carry a balance, interest charges make your purchases more expensive. Paying only the minimum can also extend the repayment period and increase the total interest paid.

You don’t have to avoid credit cards completely. Instead, use them with a clear plan:

  • Choose purchases that already fit within your budget
  • Avoid charging more than you can afford to repay
  • Review your transactions regularly
  • Know your payment due date
  • When possible, pay the statement balance in full by the due date to avoid interest on purchases, subject to the terms of your account

Using a credit card for gas or groceries doesn’t build credit by itself. What matters is how you manage the account, including making payments on time and keeping your balance under control.

A quick gut check: Before using a credit card, ask yourself whether you would still make the purchase if the money came directly from your checking account. If the answer is no, it may be worth waiting.

Money Mistake #3: Ignoring Retirement Savings

When you're just starting out in the workforce, retirement feels like it's a lifetime away. But the earlier you start saving, the better you'll be set up for when your working days are over. First, it's critical to find out if your job offers any type of retirement savings plan. Many employers offer retirement plans that allow you to contribute a portion of your paycheck. Saving in this manner means you're never missing the money, so if you want to save aggressively, increase the percentage of your paycheck that goes to your retirement account.

Don’t leave free money on the table: Many companies match your contribution up to a certain percentage of your paycheck. If your employer matches 100% of your contribution up to 5% of your check, aim to contribute at least that 5% so you capture the full match. This is essentially free money you could benefit from at no extra cost.

You can also open retirement accounts separate from any employer-sponsored options. We offer multiple Individual Retirement Account (IRA) options to help you execute your retirement savings strategy.

Start Building Better Habits Now

The mistakes above are all avoidable, and your 20s are the perfect time to get ahead of them.

Start with a few manageable steps:

  1. Set an initial emergency savings goal.
  2. Contribute something from each paycheck when your budget allows.
  3. Avoid charging more to a credit card than you can repay.
  4. Review any retirement benefits offered by your employer.
  5. Ask questions before opening a new account or choosing a financial product.

Small, consistent decisions can help you build a stronger financial foundation without expecting you to change everything at once.

We’re here to help you develop money-management habits that fit your goals. Stop by one of our offices to speak with a member of our team and learn more about the savings and retirement account options available to you.

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Frequently Asked Questions About Money in Your 20s

1. How much should I have in an emergency fund in my 20s?

The right amount depends on your income, household, monthly expenses, and responsibilities. Start with a manageable first goal, such as $500, and continue building toward an amount that could cover several months of essential expenses.

2. Where should I keep my emergency fund?

Consider keeping emergency savings in a dedicated account that is separate from the money you use for everyday purchases. Before choosing an account, review its balance requirements, potential fees, withdrawal limits, and access options.

3. Should I pay off my credit card in full every month?

When possible, pay the statement balance in full by the due date to avoid interest on purchases, subject to the terms of your account. Carrying a balance may result in interest charges, while paying only the minimum can extend the repayment period.

4. Does buying gas or groceries with a credit card build credit?

The purchase itself doesn’t build credit. Responsible account management, including making payments on time and keeping your balance under control, is what matters.

5. When should I start saving for retirement?

Consider starting as soon as your budget allows. If your employer offers a retirement plan and matching contributions, review the plan’s eligibility, contribution, and vesting rules. You may also want to speak with a qualified financial or tax professional about other retirement account options.