9 Worst purchases to avoid in your 20s that will leave you broke
Purchasing the right things in your twenties will have a dramatic positive impact on your life.
Whereas buying the wrong things can leave you broke. It is not always easy to see these blind financial spots, and it took me a while to learn what to avoid in my twenties.
The worst financial mistakes will cost more money to fix. Not just financially, but also it will take much longer to recover from these bad spending habits.
Learn to avoid wrong purchases early on to enjoy a life of financial freedom in the future.
Eight bad purchases to avoid in your 20s
1. Brand new car

As someone in your 20s or 30s, you’ll be tempted to get a nice vehicle.
The pros of a new car are not enough to outweigh the cons.
You are setting yourself up for financial freedom when you avoid this costly mistake.
When you purchase a new car, you have extra expenses. For example:
- Dealer fees.
- Forced to get comprehensive insurance.
- Finance Interest.
Save yourself the headache and avoid paying for these fees. Buying a new car is one of the worst purchases in your 20s, and that money could be invested, giving you higher returns.
Another way a new car costs you extra money is because of how fast it depreciates, so you might as well choose a beater car that works well.
Related: Get Fast Internet Without Cable.. The moment you drive it out of the dealer shop, it has already lost thousands of dollars in value. You can save for a used car bought with cash if you can live frugally without feeling poor.
Moses suggests: Buy a used car in good condition. A used vehicle in good condition is the most brilliant move to make in your 20s.
Many private sellers are willing to sell the vehicle for less than the true market value. Most of them are in a hurry, so there’s more room for negotiation.
You will also save money by not getting comprehensive insurance; this is helpful if you are a good driver. In addition, a private seller doesn’t carry finance charges or dealer fees.
2. House purchase with less than 20% down

I was very excited when I purchased my first home. There is a sense of pride in being a homeowner, but there is a way to do it right.
Yes, I know you can buy a house with less than 3% down and invest the rest, or find a job that pays for your home.. But I recommend you wait until you have saved 20% of the price of the home. It’s a genius move because of two things:
- You will choose a more affordable house because you have to save 20% of the total. Your first home should be easily affordable.
- You will avoid paying something called Private Mortgage Insurance.The amount is usually 1% on average of the price of the house. It can easily reach $200 or$300 a month.
Purchasing a home is the biggest expense in most people’s lives. If you are in your twenties, making a bad purchase in this category will wreck you financially.
Moses suggests: Put down 20% on your first home. If you can save 20% for your first home, I know you are a responsible, frugal person.
Starting your home ownership with 20% equity will put you miles ahead of everyone else. People scraping 3% to close on a half-a-million house they can’t afford is ridiculous.
Worth Reading: How We Paid Our Mortgage In Less Than Five Years.
3. Speculative investments

Speculative “investments” include things:
- Cryptocurrency.
- Paying for stock tips.
- Pay-to-play games.
- Gambling.
- Day trading.
- Network marketing.
Sure, it seems like a no-brainer to jump into one of these get-rich-quick schemes. But it is a bad idea.
Speculative investments are speculative for a reason: someone at the top of the pyramid is making all the money, while the people at the bottom are fighting for scraps.
Buying stock in a reputable company may be boring. But there is no risk of losing all your investment.
Think about it. Every week, someone wins millions of dollars playing the lottery. It doesn’t mean playing the lottery is a good idea.
Likewise, every week the news portrays someone who became a millionaire thanks to (fill in the blank with the latest speculative investment scheme)
Rich quick schemes target people in their twenties and thirties because they have little to no experience and still think there’s a shortcut to making money that people overlooked but they didn’t.
Moses suggests: Put your money in an index fund for long-term gains. Long-term, meaning at least 10 to 20 years. You cannot sell these stocks because the longer you leave your investment, the more it makes.
Read this: 10 Short-Term Financial Goals To Start Saving For Now.
4. New cell phone every year
Cell Phones have become a necessity in modern life to the point that you need a good cellphone to stay connected. Some people run their entire business just from a cell phone.
Notice I said a good cell phone and not a new cellphone.
A new iphone costs almost a thousand dollars, and this is only for the medium-tier iphone.
The cost of the best Iphone with upgraded storage and cameras is much more than that.
Spending that amount on a cellphone can cost you a lot of money over time.
Even though your carrier includes the cellphone price in your monthly amount. You will still end up paying for it, even when they make it seem like you’re getting it for free.
You can avoid this mistake by simply not upgrading every year. Even if your friends are using the newest cell phones, be content with a cellphone that’s a couple of years old.
Moses suggests: Finish paying off your current cell phone, then switch to a different carrier.
Here is a secret acronym that will save you thousands: MVNO ( Mobile Virtual Network Operator). It may take you a few weeks to do your research, so give yourself enough time.
How to save money by switching to an MVNO:
- Finish paying off your phone in your current carrier.
- Unlock your cellphone.
- Search online for “Best MVNO for (your old carrier) “
- All those MNVO carriers will work with your cellphone and will be much cheaper.
5. Expensive Clothing

If you have decided to become financially independent in your 20s, then buying expensive clothing is something you can’t be doing all the time.
Designer clothes are a waste because you can look just as good or better by purchasing the same clothes at a discount store like Marshalls or Burlington.
Buying designer clothes makes no sense, and young adults can better spend their money on education or starting a side hustle. At the very least, learn to apply the 30-day waiting rule before you make an expensive purchase.
If you are a single person that makes 80k a year looking to date. Realize that the person behind the clothes matters more than the clothes themselves. As long as they are wearing clean clothes, their personality matters more in the long run.
Moses suggests: Avoid paying for expensive shoes and clothing and start purchasing from discount stores like Marshalls.
It takes time to browse online for the right fit or the right colors, and it takes even more time if you visit stores in person. Save this time and spend it with people that matter, or at least work on income-producing activities.
Purchase clothes at discount stores once a month or ideally every few months.
Purchasing stuff with money you don’t have, on things you don’t need, to impress people who don’t care is the worst purchase you can make in your twenties.
6. Get rich quick courses
I’m a big fan of education, but like Marc Twain said once:
“Don’t let schooling interfere with your education.”
Marc Twain is saying that there is education. And then, there is the appearance of getting an education.
Thanks to social media, young people are bombarded with get-rich-quick schemes that supposedly teach them how to make money online.
Courses on dropshipping, selling on amazon, flipping houses, and day trading are very popular.
The problem is that most of these people make money teaching the subject instead of doing it. In other words, YOU are their business. They don’t do what they preach.
Spending your hard-earned money on charismatic scammers will destroy your future finances. You’ll blame yourself for not getting the results they promised, and this will leave you scarred.
Moses suggests: If you spend money on courses, keep a budget of less than $200. Every course I’ve ever taken that’s made me money cost less than that.
There are places like Udemy where you can learn profitable skills for cheap and put them into practice right away.
7. Subscription services
People in their 20s make many money mistakes, and one of these mistakes is not doing their research on subscription services.
There are so many streaming providers now that you can get away with one or two and have more than enough entertainment. Streaming services are cheap, ranging between $10 to $15.
In other cases, you can cancel most subscriptions without feeling deprived.
You don’t have to wait to find out where your money is going.
To find out the truth about all your subscription services, go through your bank statements, or ideally, have a service like Mint.com that tells you which subscription services are costing you the most.
Also Read: How To Budget For Busy People. 4 Different Methods
Young adults should be spending their time learning new skills or working to increase their income. This can help you be financially free in your thirties or earlier.
8. Credit cards with high annual fees

Let’s face it; you need a credit card to build your credit score. Preferably, one with just enough balance to pay most expenses; better if you pay it in full every month.
Getting a card with an annual fee is a big mistake; hundreds of cards have zero annual fees. All credit cards have high-interest rates, but if you avoid carrying a balance on the card, this shouldn’t be a concern.
Even if you are buying cheap goods as a young adult, use your credit card to earn points. I’ve used points to pay for two cruises and one brand new iMac.
9. Expensive Health Insurance
I spent years without health insurance.
That doesn’t mean I didn’t do anything for my health. Working at the gym allowed me to train as often as I wanted.
If you are in your twenties and have no significant health issues. You may get away with cheaper insurance, especially if you already have good health and workout.
Many people make the mistake of purchasing too much health insurance. A basic health insurance can cover you enough, assuming you don’t have a risky lifestyle.
Moses suggests: Ask friends and co-workers what kind of insurance they have to get an idea. Pick one that matches your lifestyle and saves you money.
Avoid bad purchases early in life
Financial success comes not only from increasing your income every year. But also from avoiding bad purchases that can leave you financially ruined.
Spending money on things mentioned in this article can significantly impact your future. The reality is that money is not complicated; people make it complicated.
Avoid the headache of dealing with a bad decision by going over this list one more time and maybe even bookmarking this page for the future.
Related: Money traps to avoid in your 20s | Avoid these mistakes
Most self-made millionaires were resourceful and used cheap goods when they first started. This frugal mentality paid off in the end. You can be resourceful too and avoid buying the wrong stuff in your 20s.