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How to Bounce Back from Financial Disaster Made in Your 20s

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A lot of us have been there.

Did you make some big financial mistakes in your twenties? It’s a time in your life like no other.

You’re venturing into adulthood, it might be the first time you’re truly on your own, you might be in’s truly a memorable time, for sure.

That unforgettable time can come with some dreadful financial mistakes that you might feel will take your entire life to repair.

Not so. Keep reading to learn how to bounce back from financial disaster made in your twenties.

What Financial Mistakes Can You Make As a Twenty-Something?

Well, as mentioned above, it’s a time when you are moving into young adulthood. You are testing the limits, exploring the financial world for the first time, taking out credit, possibly student loans, and at the same time, financially immature.

People in their twenties may not know how to write a check, pay bills, or balance their budget.

We all have to start somewhere and a lot of us have been there. Here are some financial mistakes that aren’t uncommon in young adulthood:

  • Taking out too much credit
  • Living beyond your means
  • Eating out too much
  • Enjoying a lot of the night life or other fun events
  • Vacationing beyond your means

Let’s take a look and see what this looks like.

Taking Out Too Much Credit

This is a common pitfall, especially in college. In the United States, at age 18 you can apply for credit. This means you can get a credit card, take out a line of credit at your bank, apply for store credit at department stores, and more.

It can be very tempting to take advantage of all the credit offers available to you, especially if it means living an upgraded life at a fraction of the price but, credit is actually more expensive and will cost you more in the long term.

If this sounds like you in your twenties, keep reading to learn some of our solutions to this.

Living Beyond Your Means

Living beyond your means is a trap that people at any age can fall into. This means your expenses outweigh your income. How can this happen?

It’s a lot easier than you might think. Here are some typical expenses that can push you into living beyond your means, right under your nose:

  • Monthly subscriptions like subscription boxes, monthly deliveries, movie streaming services, etc.
  • Eating out too much
  • Driving a car outside your price range
  • Living in a home outside your price range
  • Shopping too much
  • Grooming, beauty and self care routines like spa visits, salons, and pedicures
  • Expensive purchases like televisions, tablets, and other pricey buys

If you feel like you are struggling financially, living paycheck to paycheck, you might be living outside your means. No worries, we have some helpful advice to get you out of it.

Eating Out Too Much

This one can be very hard. With the convenience of eating out, it’s hard to say no. Working all day in your 9 to 5, coming home exhausted to your family or even yourself, if you’re single, you might be too tired to cook.

It’s simple to pick up the phone and order takeout or pick up fast food on your drive home.

Just say no. These costs can stack up fast.

When I started working my new job after graduating college, I soon started spending an extra $250/month on just food. Yes, an extra $250 just for myself. This is in addition to my regular monthly grocery spend.

How can you spend that much money on just one person for food?

It’s not hard. Eating out at lunch everyday at work, coffee runs on your drive in, dinners or drinks with friends, coffee dates, these all add up.

In your twenties, you might be new to the career world, either recently graduated or maybe still in college. Regardless, eating out too much can be a budget buster that strikes any age and a financial disaster to recover from.

Enjoying The Life of Leisure Too Much

The life of leisure is your going-out life. These are your fun times with friends at family, doing things like:

  • Bar hopping
  • Club going
  • House parties
  • Dinner and drinks
  • Movies out
  • Weekend shopping

It’s a fun time but it can get pretty pricey and leave you in debt in no time.

Vacationing Beyond Your Means

Yes, this is a thing. Vacationing beyond your means might seem hard to believe but if you’re financing your getaways on credit or being late on other bills in order to make that special vacation happen, then it is vacationing beyond your means.

I have to say, I was victim to this, one year.

Here’s what happened:

I started doing an annual friends-cation (a vacation with friends) a few years ago. We do it once a year and this was the third year we were doing it.

We visited a tourist destination in the South, drove there, and stayed in a hotel a few days while we explored the area.

This vacation had been planned a year in advance.

I got a great deal on my room, booking in advance, and had saved up to have enough spending money for travel, shopping, food, and any extras.

Three weeks before the trip, our family got hit with an unexpected expense that ate up about 80% of my savings for this trip.

I should have cancelled it, knowing that what I had leftover wouldn’t last me for a several day vacation plus travel.

I ended up going on the trip, using credit to supplement my expenses. Years later, I’m still paying off that vacation.

The lesson learned is do not vacation beyond your means.

The Right Mindset to Recover from Financial Disaster

It’s important to have the right frame of mind when tackling your finances. It can feel very overwhelming and it’s easy to sweep it all under the rug.

You should face it, head on.

I had a close friend who never checked his credit report. He cosigned for a loan for a friend when he was 18 and his friend never paid it off, wrecking his credit.

That, plus some other financial mishaps left his credit score devastated.

When I finally convinced him to check his credit, he saw that it wasn’t as bad as he remembered and he enjoyed analyzing the report, reading the suggestions given by the credit report company to strengthen his credit score and he started executing those tips to boost his score.

Now he checks his credit score every single year.

However tough it might be to face financial disaster, deal with it head on because it will continue to escalate and balloon out of control if you do nothing.

Recovering from Financial Disaster from Your Twenties

Now that we looked at some of the things that could have left your finances in disaster from actions done in your twenties, lets look at some solutions to help.

  • Identify the Disaster
  • Create and Execute a Recovery Plan
  • Measure Results
  • Get on a Budget
  • Start Saving for the Future

Identify the Disaster

This is the first step, identifying your financial disaster. What is the mistake that you did in your twenties that you are trying to fix, today?

High credit card debt?

Taking out too many student loans?

Not paying your bills on time, wrecking your credit score?

Living beyond your means?

Once you figure out what you are trying to repair, next, you’ll craft a recovery plan to fix those issues.

Create and Execute Your Recovery Plan

Creating your recovery plan is very important. You are laying the foundation for fixing your finances. Look at where you currently are and where you want to be in the future, then, identify steps needed to get you to that future place.

For example, today, you know you have $1,000 in savings, maxed out credit cards, and a 600 credit score.

You know in the future, you want to buy a house and in order to do that, you must have 10X the amount of savings, minimal credit card debt and a credit score 100 points higher.

From here, execute your plan. How are you going to get to your end goal?

Here are some ideas:

For lowering credit card debt

You must lower your credit card debt, it’s pretty simple. You have got to pay down or pay off that debt. Look at your income and create a budget for yourself, if you don’t already have one.

Figure out how much you can dedicate to your credit card payoff every month. This means you will calculate how much of your income you can put toward credit card debt to pay it off.

If you can’t contribute much to pay off the debt as fast as you want then, increase your income, like with these 10 top survey sites to earn you $300 or more per month.

More tips for paying off credit card debt? You’ll want to check out these 8 ways to pay off credit card debt.

For saving more

Saving more means you are putting more of your income toward your savings account. This can be to build up your emergency account, build your retirement savings faster, or to save for a future purchase like buying a house, among other reasons.

Again, it starts with a budget.

Look at what you have, your remaining income, after all expenses are paid and figure out what you can save. Then, start saving.

Pro Tip: Use direct deposit from your employer to automatically fund your savings account, this way you never have to touch the money and it will be automatically deposited on payday!

For saving at a faster pace

Saving a faster pace might mean you’ll need to increase your income. Here are some ways to help you get there:

For increasing your credit score

Your credit score is based on several factors like:

  • The proportion of revolving debt you are using
  • Making payments on time
  • Derogatory accounts, collections, or judgements

All this and other factors. To improve your credit score, first, check your credit. After you get your free credit score, look at the reasons the credit bureaus supply you, for how they are calculating your score. Then, fix these issues.

Some of these changes may take time like if you aren’t making payments on time, start making on-time payments and this part of your credit report should recover over time. If you have collections, it might take time to save money to pay them off.

Whatever shape your credit might be in, checking your credit report is a must, and the report will tell you exactly how to fix any credit issues. Win-win.

Measure Results

After creating your recovery plan and executing it, lastly, you want to measure results. This will keep you accountable. Check back periodically to measure your progress.

You can continue to check your credit as often as you’d like to see how the positive changes you are doing are making an impact.

Review your credit card balances to watch your debt shrink.

Check in on your savings to see your balance grow.

The progress will give you motivation to keep going and carry out your plan.

Get Budgeting

Budgeting has been mentioned a few times already. It’s so crucial. Your budget measures your spending, controls how and when you pay off your debt, paying your bills, saving, and more.

Creating a budget doesn’t have to feel daunting.

With all the apps and tools available to us today, it’s easier than ever to start your budget.

When I was working my 9 to 5 in the corporate scene, I used to use pen and paper to write down my budget. I actually did this at work, on break.

I’d write all my bills and specify the dates that I would pay each bill. It was pretty fun for me. This helped me to always pay my bills on time and maintain an excellent credit history which allowed me to buy my first home in my twenties.

I thank budgeting for this.

Check out these useful resources to help you create your budget in no time:

Starting Saving for Future

Saving is the fruit of all your work. Saving for your future means you can have a savings account, enjoy peace of mind in case a financial emergency were to arise, build for your retirement, and more.

You can start saving more by spending less:

  • Living on the essentials
  • Budgeting your paycheck
  • Make more money

Living on Essentials

Plainly, cut back on the extras. Living on the essentials is embracing a more minimalist lifestyle. This might be a drastic lifestyle change for you but it doesn’t have to be permanent.

Try starting with these changes:

  • Value the experience rather than physical possessions
  • Make time lasting and more meaningful
  • Get back to the basics
  • Declutter your home and life
  • Get rid of extras

This could mean scaling back a lot. Getting rid of extra things in your house like all the small appliances in your kitchen, extra unnecessary furniture, clothes, and shoes.

It can also means streamlining your way of life by getting rid of subscriptions, abandoning eating out, embracing only free or low cost activities, getting rid of your car, etc.

Curious about minimalism?

You will love this: How to shop like a minimalist: 10 easy steps

Budgeting Your Paycheck

Budget, budget, budget!

Check out:

These apps will help you get yourself on a budget.

Making More Money

Sometimes in order to save more, you’ve got to make more. Here are some ways you can do it:

  • Ask for overtime
  • Take a second job
  • Freelancing gigs
  • Start a side business
  • Monetize your hobby
  • Earn passive income


This one is simple. You have a job. Ask for overtime. Overtime can mean time and a half, or double time, which will add quite a bit to your regular paycheck, even if you only work a handful of overtime hours every month.

Second Job

Take a second job. In my first job, I started at a local pizza place answering phones. Two years later I was the manager. Most of our delivery drivers were military.

I lived in a military town after all, but after they’d work their military 9 to 5 job, they would work at the pizza restaurant as a driver.

They loved it because it was part-time hours, working in a t-shirt and shorts or jeans, driving their car and they always had cash in their pocket (the tips), in addition to their biweekly paycheck.

While you aren’t limited to delivering pizzas as a second job, there are tons of jobs you can do after work, like:

  • Driving for Lyft or Uber
  • Delivering food with UberEATS, Instacart, or DoorDash
  • Cashier at your local grocery or general goods store
  • Clerk at a retail store
  • Babysitter
  • Petsitter

These are just a few to name. For more inspiration, take a look at these 22 best second jobs for extra income.


Look at your skills and monetize them with freelancing. Start with what you do for a living. Can you do that same work as a freelancer?

  • Computer programming
  • Web design
  • Social media management
  • Copywriting
  • Graphic design

Find work fast and easy at freelance marketplaces like Upwork, Guru, or Freelancer. You can also find clients on social media like Facebook or LinkedIn.

Start a Side Business

Have you always dreamed of starting a business? How great would it be to make money in your side business and contribute 100% of the profit to your savings!

Not only are there tons of financial benefits to owning a home-based business, but, there are other perks like flexible schedule, unlimited income potential, being your own boss, and more.

Interested in business, but not sure what industry to break into with a limited budget?

Here are 16 businesses you can start for less than $200.

Monetize Your Hobby

If you do what you love, you’ll never work a day in your life. This is so true.

When I operated my retail business a few years back, despite working 60 hour weeks, I absolutely loved what I did. I lived and breathed the business. It made me excited. I looked forward to spending every free moment working on it.

You can get this same feeling by monetizing your hobby.

  • Stamp collecting
  • Graphic designing t-shirts
  • Crafting
  • Knitting blankets or scarves
  • Grooming animals
  • Styling or cutting hair

For physical or digital products, sell in your own online store with a storefront from Shopify or consider selling in a marketplace like Etsy or Creative Market.

I recently started a small little Etsy shop. I’ve always been interested in creating digital art so I launched a small shop with around 80 prints.

I get to explore my creative side, put out work that I truly love and I’ve already made around half a dozen sales so far! It’s fun, rewarding, and I’m making extra money.

A total win-win scenario.

You want to make money from your hobby and finally make the leap but don’t know how or where to start? These 5 steps on how to make money from your hobby will show you the path to get you started.

Earn Passive Income

If you have ever wanted to earn money while you sleep with passive income, keep reading. There are tons of opportunity to earn money passively.

Do work once in the beginning to setup passive income streams that will reward you in the future. You can do this with:

  • Investing
  • Creating digital products
  • Authoring books


This is how it works: you invest money in a venture and enjoy your returns, passive income. This can be done in a variety of ways including through micro-investing, peer-to-peer lending, or using tools like Acorns which invests your spare change.

Digital Products

Digital products are exploding! This best kept secret is a great way for anybody to earn a lot of money passively. Create digital products, sell them, and enjoy profits.

After I left my online store, I created a couple courses to help others see success with online stores like I did. Today, I still get royalties from course sales and I don’t do anything.

No marketing, no mentioning online or on social media, absolutely nothing and I get to enjoy passive income from course sales!

Here are some examples of digital products you could create:

  • Digital courses
  • Ebooks
  • Eguides
  • Printables
  • Digital art
  • Social media graphics
  • Checklists

Create your work with tools like Canva or Google Docs.  Deliver your goods to consumers on autopilot with resources like Sendowl, Teachable, or Gum Road.

Book Author

This is a rewarding way to truly express yourself and share your content with the general public. Author a book! You don’t have to be a New York Times bestselling author to make a lot of money authoring books, either.

The most successful and highest paying authors are generally not New York Times bestsellers. Interesting fact, eh?

These ideas should get you started.

Want to begin your passive income journey right away?

Read the top 10 passive income apps and websites to earn an extra $1,293 per year.

Final Thoughts

So you see, there is hope to recover and bounce back from financial disaster made in your twenties. The important thing is to face it head on, cope, create and execute your action plan, then measure your results to track your progress, move on, continue to budget and save money.

We hope you found this helpful.

What did we miss?

Have you bounced back from financial disaster? Share some things you did to overcome this challenge, down below in comments. We would love to hear from you!

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