Money Psychology

How Your 20s Life Choices Will Hurt Your 40s

March 8, 2023

Being in your twenties has its advantages and disadvantages.

It is at this age when every choice you make might affect the rest of your life. As life progresses it becomes increasingly difficult to reinvent oneself once you're in your 30s or 40s and so the twenties could easily be the golden age of making choices with lifelong consequences.

Dr. Meg Jay, a clinical psychologist, says that the 20s are the defining decade of our adulthood.

She adds that life’s most defining moments will have taken place by about age 35 while personalities change more in our 20s than in any other decade of life and development. Additionally, the brain’s major growth spurt caps off in the 20s.

Since what you do or don’t do in the thirties is a choice all the same, the 20s then remain the turning point for our lives.

With this in mind, how then can you make your twenties count by making foundational decisions that can hold and carry you through your lifetime?

Here are some life choices in your 20s that will heavily impact your 40s- and beyond. Old age is not that far.

A. Financial Decisions

1. Spending Habits

Making smart spending decisions in your 20s can set you up for financial success later in life. Here are some tips on how to decide on your spending habits:

Create a budget: The first step to managing your spending is to create a budget. Start by tracking your income and expenses, and then set goals for how much you want to save each month. This will help you prioritize what to spend on and avoid overspending.

Prioritise saving: One of the most important things you can do in your 20s is to prioritize saving. Even if you're only able to save a small amount each month, it will add up over time. Aim to save at least 20% of your income each month, and consider setting up automatic transfers to make saving easier.

Avoid unnecessary expenses: It's important to differentiate between necessary expenses and discretionary expenses. Try to avoid unnecessary expenses such as eating out frequently or buying expensive clothing items. Instead, focus on the essentials and look for ways to save money.

Plan for the future: It's important to start planning for your future in your 20s. This means setting goals for things like buying a house or starting a business and then making sure your spending habits align with those goals.

Being mindful of debt: If you have student loans like HELB or any other debt, it's important to pay them off as quickly as possible. Make a plan to pay off your debt and avoid taking on new loans unless it's absolutely necessary.

2. Investing and Retirement Planning

These are crucial components of financial planning in your 20s. By starting early, you can take advantage of the power of compounding and potentially grow your wealth over time. Some tips to consider are:

Educate yourself: Before you start investing, learn about the different types of investments available, the risks involved, and the potential returns. Read books and articles on investing and consider taking a course or consulting with a financial advisor.

Start small: You don't need to have a lot of money to start investing. Even small amounts can grow over time through compounding. Consider investing in a low-cost index fund or a target-date retirement fund.

Set clear goals: When it comes to retirement planning, it's important to set clear goals. Determine how much money you will need in retirement and work backward to determine how much you need to save each month to reach that goal.

Take advantage of employer-sponsored plans: Some employers offer retirement plans in different forms. Take advantage of these plans and contribute as much as you can, especially if your employer offers matching contributions.

Stay diversified: It's important to diversify your investments to reduce risk. Consider investing in a mix of stocks, bonds, and other assets. As you get closer to retirement, you may want to shift your investments to a more conservative mix.

3. Taking on Debt

Before accruing debt in your 20s, be cautious and responsible. You can follow these tips on how to make informed decisions about taking on debt:

Understand the different types of debt: There are different types of debt like student loans, car loans, and mortgages among others. Each type of debt has its own interest rates and terms and so it's important to understand the details before borrowing.
Only borrow what you need: Avoid borrowing more than you need by evaluating your expenses before taking on debt. Also, determine how much you can afford to repay each month. Borrowing more than you need can result in higher interest charges and longer repayment periods.
Have a repayment plan: Before taking on debt, make sure you have a repayment plan in place. This means understanding how much you will need to repay each month and for how long. Be sure to include debt payments in your budget and prioritize paying off high-interest debt first.
Build credit responsibly: Taking on debt can help you build credit, but it's important to do so responsibly. Make payments on time and keep your balances low. Avoid opening too many new accounts at once, as this can negatively impact your credit score.
Consider the long-term impact: Taking on debt in your 20s can impact your financial situation for years to come. Before borrowing, consider the long-term impact on your budget and financial goals. Will the debt help you achieve your goals or hinder them?

B. Education

1. The Benefits of Furthering Your Education

Furthering your education in your 20s can have many benefits, both personally and professionally. Here are some of the key benefits:

Increased earning potential: One of the most tangible benefits of furthering your education is increased earning potential. People with higher levels of education typically earn more over their lifetime than those with less education. This can help you achieve financial stability and security.
Career advancement: Furthering your education can also lead to career advancement opportunities. You may be able to take on more responsibility, qualify for higher-paying positions or even switch to a new career path altogether.
Personal development: Pursuing education can also help you develop new skills and knowledge, which can benefit you both personally and professionally. You may gain a better understanding of the world around you, develop critical thinking skills, and improve your communication abilities.
Networking opportunities: Furthering your education can also provide valuable networking opportunities. You may meet people in your field who can offer mentorship or job opportunities, or you may develop relationships with classmates who can provide support and encouragement throughout your career.
Fulfilment: Pursuing education can be personally fulfilling and rewarding. It can help you achieve personal goals and give you a sense of accomplishment. It can also help you make a positive impact on your community or society as a whole.

2. The Cost of Not Pursuing Education

Not pursuing education in your 20s can have long-term costs that can impact your career and financial success. Here are some of the key costs:

Limited earning potential: Without a college degree or other form of higher education, your earning potential may be limited. You may have to settle for lower-paying jobs, which can make it harder to achieve financial stability and security.
Fewer career advancement opportunities: Not having a college degree can also limit your career advancement opportunities. You may not qualify for higher-paying positions or be considered for leadership roles within your organization.
Fewer networking opportunities: Pursuing education can provide valuable networking opportunities, which can lead to job opportunities or other forms of career advancement. Not pursuing education may mean missing out on these valuable connections.
Limited personal development: Pursuing education can help you develop new skills and knowledge, which can benefit you both personally and professionally. Without pursuing education, you may miss out on these personal development opportunities.
Regret and missed opportunities: Not pursuing education in your 20s may lead to regret and missed opportunities later in life. You may realize later on that you wish you had pursued education, but it may be more difficult to go back to school or switch careers.

C. Career Choices

1. Pursuing a Career That Fits Your Interests

Pursuing a career that fits your interests in your 20s can lead to a more fulfilling and satisfying career path. Here are some of the key benefits:

Greater job satisfaction: When you pursue a career that aligns with your interests, you are more likely to enjoy your job and find it fulfilling. This can lead to greater job satisfaction and overall happiness.
Increased motivation: Pursuing a career that fits your interests can also increase your motivation to excel in your job. You may be more invested in your work and more likely to go above and beyond to achieve success.
Improved work-life balance: When you enjoy your job and feel fulfilled by your work, it can lead to a better work-life balance. You may be less likely to feel burnt out or overwhelmed, and more likely to find time for hobbies and other interests outside of work.
Better long-term career prospects: Pursuing a career that fits your interests can also lead to better long-term career prospects. You may be more likely to stay in your chosen field for the long haul, and more likely to succeed in your career as a result.
Personal growth and development: Pursuing a career that aligns with your interests can also lead to personal growth and development. You may learn new skills, gain new experiences, and develop a greater sense of self-awareness and confidence.

2. The Impact of Not Having a Plan

Not having a plan in your 20s can have a significant impact on your long-term success and happiness. Here are some of the key consequences:

Lack of direction: Without a plan, you may lack direction and focus. This can make it difficult to set goals, make progress, and achieve success in your career and personal life.
Missed opportunities: Without a plan, you may miss out on valuable opportunities that could help you achieve your goals. You may not be aware of career opportunities, personal growth opportunities, or other chances to improve your life.
Increased stress and anxiety: Not having a plan can also lead to increased stress and anxiety. You may feel overwhelmed by the uncertainty of your future and the lack of direction in your life.
Wasted time and resources: Without a plan, you may waste time and resources on activities and pursuits that do not align with your goals or values. This can lead to regret and a feeling of stagnation in your life.
Lack of fulfillment: Finally, not having a plan can lead to a lack of fulfillment and satisfaction in your life. Without clear goals and direction, it can be difficult to have a sense of purpose and meaning in your career and personal life.

D. Relationships

1. The Benefits of Building Strong Relationships

Building strong relationships in your 20s can have numerous benefits that can positively impact your personal and professional life. Some of the key benefits are:

Greater happiness and well-being: Strong relationships can provide a sense of belonging and connection, which can contribute to greater happiness and well-being. Having supportive people in your life can also help you navigate difficult times and reduce stress.
Professional networking: Building strong relationships can also be beneficial for your career. Strong relationships can lead to networking opportunities, job referrals, and other forms of career advancement.
Personal growth: Strong relationships can also contribute to personal growth and development. Through your interactions with others, you can learn new perspectives, skills, and ways of thinking that can broaden our understanding of the world.
Improved communication skills: Building strong relationships requires effective communication skills. By practicing communication skills in your personal relationships, you can improve our ability to communicate effectively in your professional life as well.
Greater sense of purpose: Building strong relationships can provide a sense of purpose and meaning in life. Feeling connected to others and contributing to their well-being can give us a sense of fulfillment and satisfaction.

2. The Cost of Not Investing in Relationships

Not building strong relationships in your 20s can have significant costs that can negatively impact your personal and professional life. Here are some of the key costs:

Isolation and loneliness: Without strong relationships, you may feel isolated and lonely. This can lead to depression, anxiety, and other mental health issues.

Missed opportunities: Building strong relationships can lead to valuable opportunities, such as job referrals, networking, and personal growth opportunities. Without strong relationships, you may miss out on these opportunities and struggle to achieve success in your personal and professional life.

Lack of support: Strong relationships can provide emotional support during difficult times. Without strong relationships, you may feel like you have no one to turn to when you need help or advice.

Poor communication skills: Building strong relationships requires effective communication skills. Without strong relationships, you may miss out on opportunities to practice and improve your communication skills, which can negatively impact your professional and personal life.

Lack of purpose and fulfillment: Strong relationships can provide a sense of purpose and meaning in life. Without strong relationships, you may struggle in your personal and professional life since relationships give meaning and fulfillment.

Wrapping Up

Dr. Jay notes that what you do daily in your 20s is building the adult you will be.

For this reason, then, the 20s are the time that you can build a strong foundation for your future or mess it up altogether depending on the choices you make.

The take-home message is: whatever you want to change about yourself, the 20s are the easiest time to make it happen.

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Njenga has over 8 years experience in multimedia and business journalism both as a writer, editor and producer. He has over 5 years of experience in radio broadcasting as a news reader, reporter and presenter. He is also a 2012 Earth Journalism Network-EJN Fellow.