The 13 dumbest things to do with your money in your 20s

When it comes to managing money, your 20s are a critical decade.

Time is on your side when you’re young, and a head start in saving and investing can result in massive financial gains later down the road.

It’s equally important to get into the routine of making smart decisions. “You don’t want to start bad habits in your 20s that will lead to potential financial mistakes down the line,” Brad Sherman, president of Sherman Wealth Management, tells Business Insider.

To get on track financially, start by avoiding these 13 pitfalls:

4. Assume you don't make enough money to start saving for retirement.

Even if your starting salary is small, figure out a way to save a percentage of your income.

Retirement might seem too far off to start considering, but some experts say that if young people don't change their rocky savings habits and start investing, they will miss the retirement boat completely.

'The amount you decide on -- whether it be 3%, 5%, or 10% of your salary -- needs to be a line item in your budget, just like beers or Starbucks are,' Sherman says. 'Anything greater than zero is better than zero.' Obviously, the more you can put towards savings the better, but don't get discouraged if you can only contribute a small percentage early on.

How to improve: If your company offers one, contribute to your employer's 401(k) plan, a common type of retirement account many companies offer.

Get in the habit of upping your contribution on a consistent basis -- just 0.5% of an increase can make a difference -- either once a year or every time you get a raise. Check online to see if you can set up 'auto-increase,' which will automatically increase your contributions every year.

If you have extra money left over, consider investing in an IRA or Roth IRA. Contributions to a Roth IRA are taxed when they're made, so you can withdraw the contributions and earnings tax-free once you reach age 59 1/2. There is an income cap on these accounts ($US116,000 a year or less for individuals in 2015; $US183,000 or less for married couples filing jointly), so they're particularly well-suited to younger people.

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