financial traps

3 Financial Traps for 20 Somethings

Your 20s are an exciting and important time in your life. During your 20s, you have the opportunity to learn, explore and set a sound financial foundation. As you begin to make more money, you have options in terms of how to spend or save. The financial decisions you make can make or break your financial security in later years. 

Just like a mouse falls victim to the cheese in a mousetrap, we too are susceptible to financial traps. With the excitement of making money and the pressure of ‘keeping up the with Joneses’, it’s easy to get tunnel vision and focus on the ‘financial cheese’… the cars, the clothes, the house, the vacations, etc.   

The illusion of the Joneses is a trap. As we often hear, the Joneses are likely broke! So, why would you want to be like them? Don’t sacrifice your long-term financial health for short-term pleasures. 

Believe it or not, not everyone has your best financial interests in mind. You have to learn to play defense! But, before we start pointing fingers, it’s important to understand that *you* might be your own worst enemy. You’ll need to play defense against yourself.

There’s no doubt the cheese on the trap is appealing, *BUT* if you say no to the cheese you might wind up finding the cow. The cow can make you exponentially more cheese! 

Which do you want? 

Don’t be a sucker like the Joneses! The cheese isn’t worth it, but the cow is! 

Below are 3 financial cheese traps to avoid in your 20s. 

1. Lifestyle Inflation

Lifestyle inflation happens when you get a raise or some other financial windfall and choose to use the extra money to elevate your lifestyle rather than saving towards retirement, paying down debt or otherwise securing your long-term financial future. 

Being aware of lifestyle inflation is the first step towards combatting it. One strategy is to try and hide the extra money from yourself. If you’re comfortably living on your current budget, odds are you could continue living that way. So, take the extra money and throw it at your debt or into your retirement account before it settles down in your checking account!

The temptation is strong. You work hard at your job and want to reward yourself and it’s OK to reward yourself from time to time. I’m not promoting a no-frills life, but you should make important financial decisions with your goals in mind. There will always be something else, so learn to play defense and understand the implications of your decisions.

If you continue to let your lifestyle inflate, you will find yourself supporting a luxurious lifestyle later in life, with nothing to show for your hard work. Not cool… 


2. Putting Off Saving for Retirement

In your 20s, it’s easy to think retirement is tomorrow’s problem. It’s so far away, right? Retirement savings *can’t* wait! One way or another, we will all be forced to stop working someday. The sooner you can start saving, the better. Whether in an IRA or 401k, your 20s are a great time to get started on your retirement savings.

The power of time is incredible and the longer you’re money is in the market, the greater returns you’ll enjoy. This is especially important if your employer has a company match. Take advantage of the free money, and the time that free money will spend in the market!

There will be times when your mind will tell you it’s ok to put it off for another year. Don’t be a sucker! In most cases, you need to walk away from the mouse trap. Saving towards retirement is working towards the cow and waiting to enjoy cheese (delayed gratification).

The cow is your nest egg, your savings, your investments. In short, the cow is your hard-earned money at work, and the more time you spend taking care of your cow, the more cheese you’ll enjoy later in life. Moooooooooo 

3. Debt

Many 20 somethings accumulate debt either through student loans or credit cards. Staying out of debt and paying off debt should be a priority in your 20s. The longer you are paying interest on your debt, the less money you have available to save! 

Getting into and staying in debt is the trap. 

Many 20 somethings graduate from college with significant student loans. There is nothing wrong with getting help to pay for college, but how you handle the debt post-gradation is vital. 

Additionally, credit cards and other loans have enabled us to buy things (houses, cars, stuff) we can’t afford

“But they ran my credit and asked me how much I make… I’m approved! That must mean I can afford it…”


Banks don’t care if you can afford it. They care whether you’ll have the money if they come after you when you don’t pay your bills.

If you find yourself in debt in your 20s, the debt snowball and debt avalanche methods are two strategies to pay down debt quickly. Similar to retirement savings, debt needs to be taken care of ASAP. Don’t ignore it – it’s not going anywhere unless you do something about it!

Being debt free is liberating and you’ll be able to focus more of your money, time and energy towards the things that really matter. 

cow not cheese

Parting Shots

Your 20s have the potential to be incredible. Take advantage of your 20s to explore, learn and set yourself up for success later in life. Whether you’re saving for retirement, paying off debt or playing defense against lifestyle inflation, you’re taking a step towards a cow kinda life and avoiding the cheese trap!

While it’s not all about the money, if you can avoid these 3 financial traps, you’ll be in a much better position in your 30s and beyond!

Remember, cow, not cheese!

Till Next Time,


20 Somethings – Less Cheese, More Cow!
Tagged on:                 

8 thoughts on “20 Somethings – Less Cheese, More Cow!

  • February 3, 2018 at 1:35 pm

    Great analogy for delayed gratification! I was saying no to cheese a lot in my 20’s (and beyond) and I now have the cow in my pasture! Wooohooo! And I can choose cheese, or milk or butter whenever I want 🙂 And I’m so glad for those choices I made early on!

    • February 3, 2018 at 1:54 pm

      That’s awesome! I didn’t even think about butter – that’s next level! Well done, and thanks for sharing; you’re an inspiration and a perfect example of what I was getting at with this post!

  • February 5, 2018 at 4:16 pm

    I’m 25… I want to leave my job sooo bad to go full time in entrepreneurship. I just started a podcast in addition to my blog. let’s hope something sticks!

    • February 5, 2018 at 11:57 pm

      I know the feeling. I was thinking about adding that as #4: Don’t get stuck in a job you don’t enjoy… Congrats on starting a podcast – I’ll have to check it out! What’s the name?

  • February 11, 2018 at 1:15 am

    This is such great advice. If there’s one thing we’ve done right in our journey it’s minimizing lifestyle inflation and getting into the stock market early. The difference in starting to invest at 25 instead of 35 is staggering.

    • February 13, 2018 at 1:38 am

      Nice work! Unfortunately, lifestyle inflation is the easy way out. It’s easy to fall into the trap. Some days we do better than other…

  • February 14, 2018 at 1:02 am

    I wish I would have been a little smarter with my money earlier in my 20’s. Then I’d (maybe) have my cow now, but instead I’m left wandering around the pasture chasing one down with a lasso!
    Oh well, I plan to stay 29 for the rest of my life so…I got time.

    • February 17, 2018 at 10:44 am

      Hey Michelle, hindsight is 20-20! I wasn’t too disciplined with my money in my early 20s, either…. but that’s ok. Even being in the same pasture as your cow means you’re working towards something. So, keep working, all the lasso work will pay off. Thanks for stopping by!


Leave a Reply

Your email address will not be published. Required fields are marked *