Personal Finance: Money mistakes you make in your 20s that will leave you in crippling debt

When you’re 22 you make a few mistakes, the greatest of them all is thinking you’ll never grow old. Thinking that time is on your side, that somehow it will never run out.

So you end up wasting time and money chasing your tail, having a good time. You forget to plan your family, your relationships, your money and your future.


Money is one of the most forgotten things in our 20s. If you’re lucky, you get your first job and it pays a whooping Sh50,000 per month. You can’t believe your luck, your friends are probably still tarmacking without two coins to rub together. You think you have enough time to save, but not enough time to party so you “vunja mifupa kama bado meno iko”.


What you don’t know is that you need to budget, to save at least 20 percent of your take home pay for the future, to spend 50 percent on your essentials and 30 percent on lifestyle, including partying.

I came across an interesting Ted Talk where the speaker, Alexa von Tobel, gave the following six financial mistakes that people in their 20s make that come back to haunt them barely 10 years later.

  1. Failing to budget

You need a budget so you can live beneath your means. Living beneath your means will enable you to save up for your future, and trust me, you need more money in the future than you need right now. In the future you will have a wife and a few children who will want a roof over their heads, food, school fees, and your parents will be older and in need of constant financial support. Don’t burn your money yet!

  1. Renting an expensive house

We all dream of living in the leafier parts of Nairobi; you want the security, ambience and the class that comes with living in the suburbs, but can you afford it?

A house that is too expensive will not allow you to save for your future, and a more immediate consequence is you might not be able to furnish it. True story.


I know of a guy who soon after college and landing his first job decided to move to Kileleshwa and split the rent with two other friends. They lived in a posh neighbourhood but could hardly afford food, and their house was empty for their entire stay. Predictably, they all moved back to their parents’ home to better plan their ‘independence’.

  1. Not paying your student loans

Most people fail here. The problem with not paying your HELB loans is that the interest and penalties make it more expensive for you to pay when they catch up with you.

If possible, clear the loan faster by paying more than the minimum instalments. This will free up your money for other needs.

  1. Not having emergency savings

The problem with not putting money away for a rainy day is that when that rainy day comes you might have to take loans to help. These loans earn interest and that makes you pay much more than necessary. Save at least 20 percent of your money to ensure you’re not left vulnerable.

  1. Negotiate your salary

This is the one lesson life taught me. Your voice is the loudest, so speak up. When we get our first jobs we feel so grateful that we accept the scraps thrown at us, it shouldn’t be that way. Negotiate a good salary and request for a raise often to ensure you don’t remain stuck with the same salary for years.

  1. Not thinking about retirement

Dear 20-year-old, you will grow old like the rest of humanity and you will retire, like everyone else. So plan for it now. The problem with failing to plan young is that you will have less time to accumulate a large amount of money for retirement. Make use of insurance policies, pension plans, etc to ensure your twilight years are comfortable.

If you don’t, you will stress up your children in your old age when your health is failing and you don’t have the energy to make a living. Free them up, let them live.

Ten to 15 years after you start this plan you will be glad you did. If you still have student loans, they may have doubled due to interest, your children will be ready for college and if you did not save for their education, they may have to take out loans and restart the vicious cycle.

My advice to you would be to start today.