Earlier this week, I heard a story that stuck with me for all the wrong reasons. A friend told me about one of his co-workers who decided to go all-in on cryptocurrency when coins were trading at all-time highs back in 2021. And I mean all in—the guy liquidated everything he owned, took out a margin loan, and poured it all into crypto. A few months later, after the inevitable downturn, the guy got hit with a margin call and lost nearly everything. In a scenario that screamed ‘crisis management,’ his parents had to refinance their home and tap into a HELOC to pull him from the brink.
The crazy part? This story isn’t an isolated incident. I’m seeing more and more people my age making questionable financial decisions that will set them back for years—maybe even decades. These choices, often made in the name of chasing quick gains or instant gratification, are putting financial freedom further out of reach. So today, I want to highlight some of the most common ways to blow through your money in your 20s—and how to avoid these pitfalls.
1. Gambling on Speculative Investments
Let’s start with the big one: speculative investments. Like the crypto gambler in our intro, throwing everything you have into high-risk investments—whether it’s cryptocurrency, meme stocks, or whatever Reddit is hyping this week—is the financial equivalent of playing with fire. Sure, the flames look cool when you’re holding a match, but you’ll get burned if you’re not careful.
Speculative investments have one key feature in common: volatility. For every wild success story, there’s a cautionary tale of someone who lost everything chasing the next big thing. And if you’re borrowing money to make these plays, you’re really gambling with your future. One bad turn in the market could leave you with massive debt, or worse, calling your parents for a financial lifeline.
2. Buying a Depreciating Asset You Can’t Afford
The day you land your first real job might feel like the perfect time to splurge on that brand-new luxury car you’ve always dreamed of. But here’s the harsh reality: cars are not investments. In fact, they’re one of the fastest-depreciating assets you can buy. The second you drive off the lot, your car’s value plummets—on average, by 20-30% in the first year alone.
When you finance a car beyond your means, those monthly payments add up, and before long, you’re funneling most of your income into a rapidly depreciating asset. Between the loan, insurance, and maintenance, that dream car could easily turn into a financial nightmare. Meanwhile, all that money could have been invested in something that actually appreciates over time.
3. Ignoring Long-Term Financial Goals
In your 20s, retirement can feel like a distant concept—almost like trying to picture yourself with gray hair and a sweater vest. But neglecting long-term financial goals now is one of the easiest ways to sabotage your future. Setting aside money for an emergency fund, contributing to your 401(k), or even building a diversified investment portfolio might not sound exciting, but it’s the foundation of financial success.
Without goals, it’s too easy to fall into the trap of living paycheck to paycheck, indulging in short-term luxuries instead of planning for the future. Whether it’s buying a house, starting a business, or retiring early, those dreams only come true if you’re disciplined enough to plan for them. And no, buying lottery tickets isn’t a long-term strategy.
4. Eating Out Every Day
We’ve all been there: it’s late, you’re tired, and the prospect of cooking dinner is about as appealing as filing taxes. So you reach for your phone, open up a delivery app, and voilà—$30 later, you’ve got dinner on your doorstep. The problem? That convenience comes with a hefty price tag, especially if it’s happening more often than you’d like to admit.
Those $10 lunches and $7 coffees add up quickly, and before you know it, you’re spending hundreds of dollars a month on meals that could have cost a fraction if you’d cooked at home. Sure, eating out might feel like a minor indulgence in the moment, but it’s one of the easiest ways to sabotage your budget without realizing it.
5. Going into Debt for Things You Don’t Need
Whether you’re financing the latest iPhone, swiping for a designer wardrobe, or buying the latest tech gadgets, consumer debt can quickly spiral out of control. The allure of “buy now, pay later” is strong, but the long-term consequences are brutal when high-interest payments kick in.
By the time you’re paying off last month’s splurge, your credit card balance has grown into a monster that keeps feeding on itself. If you want to go broke in your 20s, racking up consumer debt is one of the fastest ways to get there. Debt isn’t just a financial burden—it’s a chain that keeps you from moving forward in life.
6. Ignoring Your Credit Score
Your credit score might not feel like a big deal when you’re young, but it’s one of the most important numbers in your financial life. A bad credit score can impact everything from getting a loan to renting an apartment to securing a job. And it’s shockingly easy to ruin your credit by maxing out your cards or missing payments.
The consequences of bad credit aren’t just inconvenient—they’re expensive. High-interest rates, denied loan applications, and missed opportunities can haunt you for years. Keeping your credit score in good shape is an easy way to keep your financial future on track.
Conclusion: Avoid the Pitfalls, Secure the Future
So, if your goal is to be broke by 30, here’s your roadmap: gamble on speculative assets, finance cars you can’t afford, neglect your financial goals, rack up consumer debt, and eat out every day. Throw in a ruined credit score, and you’re well on your way to living paycheck to paycheck.
But let’s be real—no one actually wants to go broke in their 20s. The good news is that it’s entirely possible to avoid these mistakes and set yourself up for financial success. By steering clear of short-term indulgences and focusing on long-term goals, you can build a solid foundation for a future where financial freedom isn’t just a dream—it’s a reality.
Yours in fiscal prudence,
Colten S. Penner
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