When you enter your 20s, you come face-to-face with big life decisions that you may not have thought about, such as marriage, changing your career, buying a home, starting a family, or traveling the world.
However, no matter which path you choose, practicing healthy money management skills will allow you to meet your goals sooner.
Keep reading to discover how to properly manage your finances in your 20s to build a solid financial foundation. Developing good spending and saving habits will prevent unnecessary debt and stress in the future.
Save Money Regularly
I know that saving money can be challenging when you have so many necessities and wants. To make saving easier, deposit a small percentage of your paycheck into your savings account.
Your savings should cover three months’ worth of living expenses and emergencies. You can’t build it overnight, so setting smaller and attainable goals will allow you to accumulate your savings with ease.
Remember that life happens, y’all. Try not to get discouraged if unexpected problems force you to use your savings funds early!
Build a Strong Credit Score
An excellent credit score will qualify you for loans with low-interest rates and open the door to more financial opportunities. If you don’t have a credit history, start building your credit by opening a credit card or credit-builder loan to get your foot in the door.
It’s essential to pay those bills on time to raise your score and prevent blemishes. I found that automating your payments helps you stay on top of your accounts and keep your debt low.
Begin Saving for Retirement
Saving for retirement may not be your priority in your 20s. However, it’s always best practice to start as soon as possible. If you begin saving $100 per month at age 35 until you turn 67, you would have over $130,000 saved for retirement.
Consider opening an individual retirement account to directly deposit your money for the future. Thinking about retirement today will save you a lot of stress and problems in the future—older you will thank you for taking the time to save.
Control Your Spending Habits
Tracking your purchases will allow you to see where you stand financially. By following your assets, you could discover that you may be spending too much on dining out, entertainment, or clothing and need to make some adjustments.
Y’all, I know there’s so much to see and do when you’re in your 20s, but responsible spending is the key to having a healthy relationship with finances.
Learning how to manage your finances in your 20s will set you up for the entirety of your adult life. It may sound like a lot of work, but you will live a financially free life with patience and discipline.
Remember that it’s OK to make mistakes or dip into your savings if you need to as long as you replace what you’ve spent.