The best (and worst) financial decisions I made in my 20s

I recently went on a trip with some younger relatives and had a sobering moment. We were playing 20 questions – the game where one person thinks of a celebrity, and the others ask questions to figure out who it is.

“Is he over 40?” I asked. “I think he’s sort of … middle-aged?” my relative said hesitantly. That wasn’t much help. We kept going.

We all get older, even the Boy Who Lived. But with the right preparation in your youth, your later years can still be magical.Credit: Simon Letch

Slowly, I pieced it together. I cringed as I realised the actor she was thinking of was around my age. With a hint of resignation, I blurted out the answer: “Daniel Radcliffe.” Sorry, Daniel. I’m not exactly thrilled about it either.

But honestly, I don’t mind getting older. A lot of good comes with it – especially if you make a few smart decisions along the way.

Here are some financial choices I made in my 20s that set me up for a stronger 30s, and some that I’d change if I could rewind the clock.

Good decisions in my 20s

1. Prioritising financial security over maximising my lifestyle

There’s a common belief that your 20s are for living it up – travelling, partying, spending freely – because “you’re only young once” and later on responsibilities will weigh you down.

But once you get used to a certain lifestyle, it’s difficult to scale back. Cutting back later feels like a loss, even if it’s financially necessary.

You might think you’re just doing it now and you’ll sober up later, but it’s more accurate to think your choices today will become your new normal tomorrow.

2. Prioritising building my own financial capability

There is a moment for many people where you realise you don’t know what you’re doing with your money, and you should figure it out.

This can be a fork-in-the-road moment. You can decide to outsource it and find a professional. Or you can get your hands dirty and figure it out for yourself.

The latter feels like the hardest decision in the present, but it’s the least painful decision in the long term – a bit of short-term pain for massive long-term gain.

No amount of outsourcing will give you the confidence that comes with knowing how to save, invest and manage your finances. You can’t buy that confidence. You have to work for it.

If I could go back, I’d start investing whatever I could during university – not just for the returns, but to build the habit early.

3. Prioritising quality of life over financial success

It’s easy to fall into the trap of making financial success the main decision-making criteria – so you stay in a job you hate because it pays well, or avoid things you can afford comfortably such as a therapist, personal trainer, or household help, which could improve your quality of life.

There is a difference between spending on lifestyle versus quality of life. Over-optimising for your lifestyle at the cost of long-term financial security is one extreme, but over-optimising for financial success at the cost of quality of life is the other. You have to strike a balance.

Decisions I’d rethink

1. I was too influenced by frugality and cost-cutting advice

There’s a whole world of advice dedicated to cutting costs: spend less, hunt for bargains, find hacks, count every penny...

I’m not a big fan of this approach. Personally, it led to a lot of anxiety, fuelled my perfectionism, sapped a lot of joy out of life and kept me stuck in a scarcity mindset.

Now, I believe in creating a streamlined savings system that does the heavy lifting and focusing on maximising value for money instead of minimising costs and sweating the small stuff.

2. I ignored my superannuation during university

During university, I worked a handful of part-time and casual jobs, but I figured I’d start taking superannuation seriously once I got a “real job”.

By the time I did, I had multiple super accounts with balances so low that fees, low returns and insurance premiums had eaten most of them away. Had I optimised my super from my first job, I’d be thousands of dollars better off today.

3. I delayed investing for years

When you’re young, it’s easy to feel like you aren’t old enough or don’t have enough money to start investing. But what I didn’t know then is that the biggest asset you have is the time you can leave it invested. You’re better off starting with $100 today than $500 in another 10 years.

If I could go back, I’d start investing whatever I could during university – not just for the returns, but to build the habit and mindset early.

My letter from Hogwarts never did arrive. But now that I’m apparently “middle-aged”, I am glad I at least made decisions in my 20s that gave me the next best thing – financial security.

Paridhi Jain is founder of SkilledSmart, which helps adults learn to manage, save and invest money through financial education courses and classes.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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