Am I the only one who thinks that finances are the biggest downside of being an adult? Like, let’s go back in time to before I had to pay bills and take out loans for stuff. It’s the worst. Unfortunately, it’s something we all have to learn to navigate. Plenty of people wait until their 30’s to figure it all out, but you’ll definitely thank yourself if you start learning these financial habits in your twenties!
Start a Budget
Budgeting is, like, the first step you should be taking for your finances, the most basic of financial habits, and it’s definitely a habit that will become more and more essential as you get older. Here’s the way I started our budget (I use a spreadsheet). I added one column that is our “ideal month”. I started with our set payments such as loans, utilities, cell, phone, etc. Then I added in a cell for each of the monthly expenses that vary month to month, such as groceries, eating out, food and care for Leia, spending money, etc. I set a spending goal for each of those, based on what we had spent in previous months. There’s never a month where we’re spot on with every category, but at least we have a general budget to stick to so we know almost exactly how much we’ll spend versus save each month. Each month I go through and fill in actual spending so we can compare that to our goal.
If you’re not big on the idea of doing your own with a spreadsheet, there are plenty of apps that will help you create a budget!
Build Your Credit
It’s not exactly breaking news that you should be working on building your credit. It’s going to become essential when it comes to buying a car or house, or even for renting an apartment! Your credit is only going to become more important as you get older, so it’s absolutely better to start building it right away! If you aren’t already, start monitoring your credit to get an idea of where you are, as well as to make sure you’re aware of any changes. Make sure you make every single payment on time, whether it be your credit card, your rent, medical bills, etc.
Build a Savings
Dave and I have been in savings mode for years. First, it was two years of saving for the wedding, then another year of saving for the house. For each of those we had a specific savings goal, and put all the money toward that at the end. We haven’t been in the situation of saving just to save and build an emergency fund, though! When you’re not savings for a specific item or under a deadline, it’s harder to know how much to save, and to motivate yourself to do so. I recommend deciding on a specific amount you’d like to save each month, and move that money into your savings account as soon as you get paid. If you tell yourself you’ll put what’s left at the end of the month into savings, you’re probably more likely to spend the money on something else.
Set Financial Goals
How many times have you found yourself thinking “I would love to buy a house” or “I really want to get my credit paid off”, etc.. If you’re anything like me, it’s all the time! We all have financial goals we want to meet, but the key is to turn those goals into plans. If you have specific financial goals you want to meet in the near future (a large purchase, or perhaps a savings goal), make a plan for yourself for how much money you’re going to put away each month toward that goal. Having financial goals is great motivation for savings because you know what you’re working toward!
Save For Retirement
In our twenties, retirement is the last thing on many of our minds. It might seem silly to have money taken out of your paycheck each month for retirement when that money could be going toward other things. As silly as it may seem now when retirement is decades away, I promise someday you’ll be glad you did it. These days, the chances look murkier every day that millennials will ever be able to retire, with the cost of living constantly rising and the future of Social Security unsure. You won’t regret taking your future into your own hands. The great thing about getting a job post-college is that your employer very well might have a retirement plan that they’ll contribute to! Check with HR and see how much your employer is willing to match. I recommend maxing that out! My employer matches up to 6.5%, but some are higher than that! Even if you’re employer doesn’t contribute, that’s all the most reason to start saving yourself now.
Cut Unnecessary Purchases
I cringe looking back at the amount of money I wasted in high school and college. In high school I had a job and literally no expenses, so all of my money went toward clothes, useless crap, eating out, going to movies, etc. In college, I had more expenses, with rent and utilities, plus grocery, textbooks, etc. However, my student loans covered all tuition and many of my living expenses. So I still had plenty of money to play with, and I assure you I wasted most of it. Now that I have infinitely more bills and monthly payments, I kick myself for not saving more of that money. I think the line between necessary and unnecessary becomes much clearer when you’re out in the real world! There are better things you could be doing with that disposable income, such as paying off debt or putting it away for an emergency.
Check Out This Post: 8 Things to Stop Wasting Money On
Limit Additional Debt
If you’re in your twenties and out of college in the last few years, chances are you’re drowning in student loan debt like the rest of us. So the last thing you want to do is pile on additional debt! In college Dave and I wouldn’t think twice about racking up our credit card bill, knowing we would pay it off eventually. Now that we’re already paying off multiple student loans, plus two cars and now a house, the last thing we want to do is add an additional monthly payment to that. We still use our credit regularly for the rewards, but we continue to pay it off each month. Credit card debt can spiral out of control quickly, and now is the time to stay on top of it!
What financial habits are you working on in your twenties?
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