Avoid These 7 Big Wealth Killers in Your 20s

As a young adult, you’re possibly making a lower income, still attending college or trying to understand the basics of using money responsibly. While you might not yet have a ton of cash to invest, avoiding common poor money decisions will help you build wealth earlier in life.

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According to Empower Personal Dashboard data, the median net worth for those in their 20s was just $7,638 in November 2024, compared to $35,649 for those in their 30s.

In a recent video, finance YouTuber Jaspreet Singh discussed these seven wealth killers that harm people in their 20s.

A new car payment averaged $753 in April 2025, according to Cox Automotive. That doesn’t include other expensive ongoing costs that Singh discussed, like premium gas, insurance and maintenance.

He also said that many people get into a cycle of taking out more expensive auto loans since they get a fancier vehicle once they’ve paid the last one off. That will keep taking up your budget and making investing and building wealth difficult.

Singh recommended getting a cheap, modest car in your 20s, putting your extra cash toward investments and getting a better vehicle when you’re in better financial shape in your 30s. While you’re at it, consider buying your cars with cash to avoid loans and interest.

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Singh said, “The reason why the watch industry has been so profitable is because after the jeweler sells you the watch, they’re now also selling the financing for you to pay for that watch.”

Getting a luxury watch in your 20s might seem like a good way to look fancy, but the total financing cost with interest may not be worth it. Holding off until you’re older and have enough wealth to buy one debt-free is wiser.

Singh also mentioned there’s no guarantee your fancy Rolex will gain value, especially as more people hold off on nonessential purchases. That’s bad news if you’re considering the watch an investment.

Seeing other young adults posting pictures of their dream vacations online can tempt you to book a trip to enjoy yourself, but the cost can quickly damage your finances. The travel insurer SquareMouth found that one trip abroad averaged over $10,000 alone.

Singh said that these vacations aren’t helping you make money; instead, they can leave you stuck with a credit card bill you can’t pay. Plus, you might continue the pattern of booking more fancy trips due to stress. That’s why Singh advised not taking a trip unless you have the cash.

Singh said, “People would rather look rich than be rich.”

He discussed the increase in luxury purchases when people got stimulus checks and unemployment checks during the 2020 to 2021 downturn. While some may turn to such items to feel richer in a tough financial time, Singh said the only people getting wealthy from those purchases are the companies.

It’s wiser to hold off on designer clothes in your 20s while you build real wealth. Eventually, you can afford them and not simply look rich.

Having children adds many new expenses, like food, diapers, doctor bills and nursery equipment. Singh said these costs can lead to debt so that you don’t have money for your children’s college and get financially stuck yourself. He advised waiting to start a family until your finances are in the right place.

Singh also encouraged picking a partner carefully since divorce is financially damaging. You’ll want to choose someone who is an asset and doesn’t create financial problems.

According to Singh, it’s common to regret buying a home due to affordability issues. Besides buying a more expensive home than you should, you might not look at the costs (like utilities, repairs and upgrades) that aren’t in the mortgage payment. This can leave you drowning.

Singh explained, “All of your money is going right into the home, so it becomes a money pit as opposed to something that you thought you’re gonna just be able to pay off and live a little bit more financially free.”

To own a house in your 20s without straining your budget or missing out on investing opportunities, find something with a truly affordable monthly payment based on your budget. Fannie Mae gave a guideline of not letting housing costs exceed 30% of your pre-tax pay.

Your 20s are a great time to avoid new debt and get rid of existing debt since those payments otherwise cut into your wealth-building progress. Singh suggested it can make sense to invest less so you can get rid of high-interest debt sooner. Besides saving you on interest, being debt-free will reduce your financial stress.

Reining in your spending and finding higher income opportunities can help you invest some money and pay down the debt at the same time.

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This article originally appeared on GOBankingRates.com: Jaspreet Singh: Avoid These 7 Big Wealth Killers in Your 20s