Six Things Keeping You Poor!
Recently, I overheard a conversation between a couple of 20-somethings that really got me thinking: what keeps people in their 20’s broke? A few things came to mind right away.
Eating Out
This one jumps out at me immediately. I’m no stranger to fast food and eating out, I completely understand the appeal. And I’m not saying there’s anything wrong with enjoying a McDonald’s meal every now and then or a Starbucks latte. But the problem for a lot of young people is that fast food usually isn’t cheap or healthy.
For the average young person making $10–$20 an hour at an entry-level job, one meal out often costs an hour’s wages or more. Throw in a Starbucks drink in the morning and another meal out in the evening, and you’re looking at close to 20% of a day’s pay.
The crazy thing? I know multiple young people who do this nearly every single day! No wonder they always complain about having no money — they’re eating and drinking it away. In my opinion, this is the #1 money waster among people I know between ages 18 and 28.
Spending $300–$600 a month on eating out when you’re only making $2,400 a month is a great way to stay broke forever. Not to mention, it isn’t healthy long term.
Personally, I’ve cut my eating-out spending to about $325 total for the first eight months of this year. In past years, I was averaging $100 per month, but I wanted to make a change because I knew how bad it was.
Cars
As I’ve talked about at length here on the blog, I love cars. But financially, cars are some of the worst purchases you can make: they cost a lot up front, cost you money every month, and lose value over time. Talk about a bad deal. Still, for most Americans (especially where I live), cars are a necessity.
What isn’t necessary is a $50,000 car at 19 years old. Part of the conversation I overheard was two girls in their late teens talking about getting loans for cars priced between $30k–$50k, depending on what they could get approved for. Yikes. Even bigger yikes when you know they’re only making $33k a year. And the biggest yikes of all? One of their 19-year-old boyfriends is paying over $800 a month for his car!
It makes my head hurt. Sadly, I know this isn’t uncommon. The truth is, you can find great, used, and reliable transportation for around $10k.
Personally, I’ve slowly upgraded my daily drivers as I’ve grown financially. My first daily was $2,800 (which I drove for six years), then $11,500 (two years), and now my current car at 24 was $14,500, paid in full, and it only makes up about 3.5% of my net worth.
If you factor in my other fun car, that percentage grows to about 7.75% — higher than I’d like, but still probably less than most 24-year-olds.
Get-Rich-Quick Schemes & Clothes
For young men, get-rich-quick schemes seem to be the big trap. Unfortunately, even some of the smartest guys I know have fallen for them, often alongside expensive “guru” courses.
One friend of mine believed day trading would make him rich. He bought a course, studied for endless hours, and thought he’d hit 50% annual returns year after year. But once he started trading real money, he lost $20,000 he had saved up at 23 years old. Even worse, another friend followed him down the same path and lost $14,000 at 21.
It was a struggle to convince them to open Roth IRAs and invest in low-cost ETFs… but blowing it all on day trading was somehow easy sadly.
For young women, the trap often comes in the form of clothes shopping. I know it sounds cliché, but seriously: I’ve talked to several women who have dressers and closets full of clothes they’ve barely worn — or never worn at all. At first, I thought it was just a one-off thing. But now I can name at least 5–10 women I know personally who are like this.
And for both men and women, buying small trinkets and useless junk is common. I often hear: “I get my paycheck, and by a week later it’s gone! And I don’t even know where it went.” To me, that’s a clear sign you’re not buying anything meaningful.
Traveling
This one I don’t have as much personal experience with, but I see it mentioned often when people reflect on their 20s. There seem to be two camps:
Camp One: Wished they had traveled less and saved more.
Camp Two: Wished they had traveled more and saved less.
I can understand both sides. If traveling is truly important to you, then spending money on it can be worthwhile…within reason. But maxing out credit cards to fund trips is never good, and you’ll likely regret it later.
One of my good friends has traveled to many states and three countries by 24. He loved it, but he’s been broke for years because of it. Looking back, he says he would have held off on the big trips and stuck to smaller, cheaper ones in the U.S. He would still have gotten the experience of traveling, but without the financial stress it has caused him now.
The Biggest Waste of All
The categories above are all major money wasters, but to me, the biggest killer of wealth in my generation is this: people not taking advantage of their living situation to save and invest.
It’s one thing to waste money while living on your own, but it’s another when you’re doing it while living at home rent-free.
I personally know multiple people living with parents (or with a partner at their parents’ house) who have no real bills… yet still waste all their money on food, cars, clothes, or trips. It’s painful to see because I know how powerful those years could be if used wisely. You can literally set yourself up for life if you save and invest while living at home.
Sadly, I don’t know a single person in real life who has done this. Every one of them, and I can think of at least five examples, has used their situation to spend more, not save more.
It’s hard to listen to them complain about being broke when the answer seems so clear.
Advice for Other 20-Somethings
My advice for anyone in their 20s is simple: spend less than you make, invest the rest in low-cost ETFs or index funds, and go enjoy your life. I didn’t write this to vent but rather to share what I see in the peer group around me. It is very sad seeing the potential many people have being lost to something as silly as Starbucks.