12 good money habits to start in your 20s

 

12 Good Money Habits to start in your twenties

Your twenties are a great time to develop good money habits. These personal finance habits can be carried out throughout your life, and if you start as soon as in your twenties (or earlier, if possible!) you will be well on your way to your financial goals.

Part of the reason why I’m writing this post is that I definitely did not have may healthy money habits in my early twenties. I did not know how to budget, and any money I had left after paying my bills was used as fun money.

And that is why this post is an important one for me. I truly believe that money management is such a crucial skill to learn at a young age, but especially in our twenties.

Our twenties are a time where a lot of people go into debt, either because of student loans or because of credit card bills. It’s also really easy to damage your finances when you first start getting paid by a “real, grown-up” job, so it’s important that everyone starts getting educated about money as soon as possible.

So without further ado, here are 12 good money habits to start in your twenties that are going to help you reach your money goals.

Create a budget

Having a budget is one of the simplest and most crucial ways to start financial planning. With a budget, you are less inclined to spend more money than you need to.

A budget is a plan that you set yourself for your money where you make your cash work for you and your needs. Having a budget is going to help you establish spending limits and set you on your way to responsible money habits.

If you have not ever set yourself a budget before, not to worry. There are many different budgeting apps you could try as well as many helpful blogs that are going to help you figure out how to budget, and how to actually stay on track with this new financial direction you are taking.

Budgeting is going to also help you with the next money habit, which is to…

Start saving

You knew this was coming, didn’t you? Saving money towards your future should definitely be at the top of your financial priorities.

Sometimes though, it can be easier said than done, especially when you are not making a lot of money and are drowning in debt.

In times like these, it is still good to save, even if you are just saving $50 a month. When you get into the habit of saving, it becomes easier for you to put money away later on in life too, no matter what your salary is.

If you find that saving even $50 is a challenge for you, it might be a good idea to find some work from home jobs you can do to create an extra form of income. Online jobs are becoming increasingly more popular because there are a lot to choose from, depending on what your interests are and how much free time you have. 

Set specific financial goals

Having financial goals is great because it keeps you motivated to work towards something you actually want to achieve.

Financial goals are very subjective and not one size fits all. One person’s financial goal might be to become a millionaire by 50, and another person’s goal might be to get out of debt by 30. It all depends on you and your specific circumstances.

Once you know what your goals are related to your finances, you can start coming up with a plan.

If you are someone who has a lot of debt and wants to pay it off before you turn 30, look at how much you owe. Then, calculate how much you would have to pay every month until you reach 30 to pay it all off.

Sometimes, you may find that you can’t reach those goals in the exact time-frame you set out for yourself. And that’s okay. In that case, set smaller goals which will ultimately get you to your bigger goals and to where you want to be with your finances.

Pay off your credit cards

A big thing that many of us struggle with financially is credit card debt.

If you’ve racked some of that up, there are ways to go about credit card debt which will make your life a lot easier.

A good rule when paying off credit cards is to look at your debt in chunks rather than looking at the whole number. For example, say your debt is $10,000, you can divide that up into four $2,500 payments. Sure, the balance you owe is still the same, but this way makes it a little bit more manageable to pay off because it’s a less overwhelming approach.

Also, if you carry a balance on more than one card, it is good practice to pay off the one which has the highest interest rate first. This way you will be saving yourself from higher interest fees.

If you can afford to, pay a little more than the minimum balance. When you do this, it is going to help you pay off that debt much faster. That, of course, leads to less interest you have to pay.

Don’t impulse shop

Impulse shopping on a regular basis isn’t the best money habit you can have. Not only does it potentially lose you a lot of money, but it also makes you buy a lot of stuff which you probably don’t even need.

I’m not saying that going shopping once in a while is going to completely mess up your finances. However, there is a smart way to shop that is going to be more effective than impulse shopping.

A simple way to shop with a purpose is to have a shopping goal. Before you go out, make a list of the things you need to buy, and stick to that list.

If you feel like you really want something that isn’t on your list, tell yourself that if you still want it the next day, you will come back for it. Chances are, you will not really feel like going back to get it. That will tell you that you didn’t really want that item in the first place.

Start an emergency fund

I read somewhere that most Americans don’t even have $300 tucked away for emergencies.

And I’m not going to lie. For a long time, I didn’t have it either. It wasn’t until I actually had an emergency that I realized how important having an emergency fund is.

If you are in the same boat I was in, it is never too late to start. Make saving for an emergency fund a priority, and put as much in it as you can. $300 is a good start and eventually, move up to $1000.

If things ever go wrong, you will be glad you planned for a rainy day.

Have a retirement plan

You may think that your twenties are too young to start planning for retirement. I disagree! You never know what might happen in the future. The sooner you start investing in your golden years, the easier you will have it later on.