10 Common Budgeting Mistakes to Avoid in Your 20s 💸

Let’s be real—budgeting in your 20s can feel like trying to build Ikea furniture without instructions. You know it’s important, but no one really taught you how to do it right. 😅

Whether you’re managing rent, trying to save money, or using a credit card to build credit, the way you budget today can set you up for success—or stress—for years to come.

Let’s break down the most common budgeting mistakes young adults make and how you can avoid them (without giving up your social life).

1. Not Having a Budget At All 🧾

Budgeting might sound boring, but not having a budget at all is like trying to road trip with no GPS—you might get somewhere eventually, but probably not where you want to be.

Many young adults just check their bank balance before spending, thinking, “If I’ve got money, I’m good.” The problem? That doesn’t account for rent, subscriptions, or that friend’s birthday dinner next week.

🎯 Fix it: Track your income and all your monthly expenses—including irregular ones like yearly subscriptions or travel. Use a budgeting app, a spreadsheet, or even a simple notebook. The key is consistency, not perfection.

Want help getting started? Watch our YouTube video “Everything You Need To Know About Budgeting” for a full breakdown. 🎥

2. Ignoring “Invisible” Expenses 👀

It’s not the $100 shoes you planned for that kill your budget—it’s the random $7 coffees, $10 deliveries, or $15 subscriptions you forgot about. These sneaky, recurring expenses quietly drain your account over time.

Ordering Uber Eats twice a week, forgetting to cancel a free trial, or paying ATM fees all the time? That adds up fast.

🔍 How to fix it:

• Review your transaction history every month

• Cancel anything you’re not using (subscriptions, apps, memberships)

• Give yourself a set amount of “fun money” each month and stick to it

By being mindful of these small costs, you’ll free up more money for what really matters—like saving, investing, or using a credit building app to improve your financial future.

3. Not Saving for Emergencies 🚨

Life throws curveballs—your car breaks down, your laptop crashes before finals, or your roommate bails on rent. If you’re not prepared, it can feel like a financial disaster.

That’s where an emergency fund comes in. Without one, your only option might be to swipe your credit card and deal with interest later (which makes everything more expensive).

Experts recommend saving 3–6 months' worth of living expenses in an emergency fund. That might sound like a lot, but it’s easier if you start small.

Pro Tip: Set a savings goal and start earning 4.00% on your savings with Step’s Savings Goals. You’ll grow your emergency fund faster, automatically. 💰

4. Relying Too Much on Credit Cards 💳

Credit cards can be a great tool—but only when used intentionally. Many young adults fall into the habit of using them for everyday purchases without a plan to pay off the balance.

This can quickly spiral into high-interest debt. If you're only making the minimum payments, that $50 dinner could end up costing $75+ with interest.

👎 What to avoid:

• Using credit to cover expenses you can't afford

• Carrying a balance month-to-month

• Applying for too many cards at once

👍 What to do instead: Use a credit card to build credit—not to build a lifestyle. Keep your utilization below 30%, pay your balance in full, and track your spending so you don’t overspend without realizing it.

5. Not Building Credit Early 📈

A good credit score isn’t just for buying a house one day. It affects your ability to rent an apartment, get a phone plan, or even lower your car insurance.

The earlier you start building credit, the easier it is to qualify for lower rates later.

People who start their credit journey early with Step typically reach a credit score of 721 by 18—putting them ahead of the game before they even hit college.

💡 Don’t wait until you need credit to start building it. Start now, and your future self will thank you.

6. Spending Without Setting Priorities 🛍️

Let’s say you want to save $2,000 this year, but you also want to go to a music festival, eat out every weekend, and upgrade your phone. If you don’t have clear financial priorities, it’s way too easy to blow your money on impulse buys.

🎯 The fix:

• Define your top 2–3 financial goals (saving for travel, paying off debt, building credit)

• Decide how much of each paycheck goes toward those goals

• Use a “values-based budget” where your money reflects what actually matters to you

When you start spending in alignment with your priorities, your budget becomes something that empowers you—not something that holds you back.

7. Forgetting About Non-Monthly Expenses 📆

You crush your budget in January… then February hits and you forgot about that annual Spotify bill. 😬 Sound familiar?

Many people forget to plan for “irregular” expenses like:

• Holiday gifts

• Annual subscriptions

• Car maintenance

• Travel or tuition deposits

👀 Here’s how to avoid that:

• List out all the non-monthly expenses you expect this year

• Divide each by 12 and save a little each month

• Create a separate “sinking fund” so you're ready when they hit

Being proactive beats being surprised—especially when you're trying to stay on top of your finances.

8. Budgeting Based on Gross Pay Instead of Take-Home Pay 🧮

You land your first job and you’re thrilled to be making $4,000/month. But once taxes, benefits, and student loan payments kick in, you’re left with $3,000. If you budget off that $4,000 number? You’ll constantly feel broke.

🔑 Golden rule: Always budget based on what actually hits your bank account—not what your offer letter says.

And if you freelance or work multiple jobs, set aside at least 25–30% of your income for taxes. It’s not fun, but it’ll save you from a nasty surprise later.

9. Setting Unrealistic Budgets 🤯

“I’m going to save $800/month, eat out zero times, and never buy coffee again!” Sounds great… until week two, when your friends want to go out and you’re already over budget.

Setting goals that are too strict sets you up to fail—and then you give up altogether.

🎯 Instead:

• Start with realistic, small changes

• Track your wins (even $50 saved is progress)

• Adjust your budget monthly based on what worked and what didn’t

Budgeting is a skill. You’re not going to get it perfect right away, and that’s okay.

10. Not Tracking Your Progress 📊

Making a budget is just the beginning—tracking your actual spending is what makes it work. Without this step, you have no idea if your budget is helping or hurting you.

You might think you’re sticking to your plan, but a few overspends here and there can quickly derail your goals.

🛠️ Tools to use:

• Google Sheets or Notion

• Your bank or card’s built-in spending tracker

• Weekly or bi-weekly check-ins with yourself

Final Thoughts + Call to Action 🎯

Here’s the truth: Budgeting doesn’t mean giving up everything fun. It means spending smarter, saving intentionally, and using tools like Step to build the kind of financial future you actually want.

Start now, while you're young—because these habits compound over time. 💥

Want to build credit, save smarter, and spend better? 👉Open your Step account today and take the first step toward financial confidence.