10 Insanely Smart Money Habits to start in your 20’s

This post is all about smart money habits to start in your twenties!

The financial habits you develop in your 20’s have a profound impact on the rest of your life and can determine your long term financial success. That’s why learning how to manage your money, pay off debt, create a budget and save for retirement at a young age is so important!

If you want to learn the money habits to start right now that will set you up for future financial success, then you came to the right place! I’m breaking down the 10 best money habits to start in your 20’s for a financially stable and successful life.

Looking for more financial resources? Click here for more posts on budgeting, saving money, becoming debt free and more!

Keep reading to learn 10 Insanely Smart Money Habits to start in your 20’s!

1. Learn How to Successfully Budget and Track Your Spending

Want to know the best way to manage your money, avoid debt and achieve your financial goals – CREATE A BUDGET!! Every single person needs a budget! A budget is simply a tool to use to track all of your expenses and income. It allows you to have complete control over your finances and to see where all your money is going.

Now, I know finding a budgeting document that is easy to use and to understand can be hard to find, so I created one for you! Download your free budgeting template here.

This is the exact budgeting document I’ve used for past two years. and it’s allowed me to pay off over $38,000 of debt and counting. This budgeting template will allow you to visually see the purchases you’ve made, track your monthly bills and debt, analyze your income and expenses by category, analyze your annual income vs. expenses and more!

2. Pay off your credit card bill in full each month

If you regularly use your credit card, make sure you pay off your balance at the end of each month and are not using your card to buy things you cannot afford. That’s where you can get into trouble and rack up credit card debt.

If you’re using it responsibly, there are a lot of benefits to having a credit card! For one, most cards offer cash back on all purchases or rewards such as travel miles, which is awesome! By using your card regularly, you’re also building credit history which helps to improve your credit score.

3. Build an Emergency Fund

Building a 3-6 month emergency fund is so important! This way, if something unexpected comes up (if you were to lose your job, need to pay for a home or car repair, have medical expenses, etc.) you will have money to cover the expenses.

Work on saving $1,000 first, then 3 months of your expenses, and then 6 months. I recommend setting a monthly savings goal for yourself and create an excel doc to track your savings progress!

Remember, do not touch this money after you’ve saved it, unless it’s for an emergency! I’d recommend keeping it in an account that’s easily accessible like a high-interest saving account.

4. Learn to say No!

This is another crucial money habit to learn at a young age – Learn to say No! You don’t have to go to every activity or event someone asks you to go to or buy the latest and greatest products just because someone else has them.

Saying yes to too many things can drain your bank account FAST. Be picky about how you’re spending your time and who you’re spending it with. Only do activities you actually want to do, not because you feel like you have to. And always, always, always, stick to your budget.

If that trip with your friends isn’t in your budget right now, then say no. It’s okay to say no! Click here to read the 10 biggest money mistakes most millennials make. Are you currently making any of these?

5. Set Short Term and Long Term Financial Goals

Do you want to be debt free, do you want to purchase a car, buy a house, travel the world, retire early? Whatever your goals are, it’s important to set short term and long term financial goals that will help you get there.

If you’re goal is to retire at the age of 50, then you need to think about the financial goals you can set right now that will help you reach that goal. Figure out how much money you will you need to save and invest each month to be able to retire then.

That’s simply an example, but I encourage you to sit down and write out all your goals for life and the things you want to accomplish. After you do that, set financial goals for yourself – short term and long term that will allow you to live the life you want.

6. Never buy anything the first time you see it

This is an awesome habit to get into at a young age because impulse spending can be very dangerous! If you’re shopping in store or browsing online, never purchase anything the first time you see it. Wait at least two to five days before deciding if it’s something you really need to have.

Most times, you’ll completely forget about the item. But, if you do still want it, ask yourself – Do I absolutely need this? How many years of use will I get out of this item? Can I rent or borrow this item instead? Do I have something similar?

After you’ve asked yourself those questions and if you still want to buy the item, at least make sure you’re earning cash back through your purchase with a cash back site like Rakuten!

Sign up for Rakuten and get $20 added to your account. You will earn 1% to about 10% cash back on everything you buy. It’s free and totally genius!

7. Start Contributing to your Retirement Account

You are never to young to start saving for retirement. I started contributing to my retirement account when I was 21 years old! Remember, the earlier you start saving, the more money you’ll have by the time you retire because of compound interest!

If you work for an employer that offers a 401k contribution match, make sure you are contributing enough money to get the full match. That is free money, so take advantage of it!

If your employer doesn’t offer a 401k for you to contribute to, look into an individual retirement account (IRA). This article lays out the key differences between Traditional and Roth IRAs and how to choose which is best for you.

8. Make Paying Off Debt a Priority

Did you know the average student loan debt in the U.S. is over $37,000? That’s a lot of money! Most Americans in their 20’s end up accumulating some student loan debt, credit card debt or auto loan debt. I know I did. I owed over $50,000 between my student loans and car loan!

However, after graduating college, I made paying off debt my number one priority. And you should too! By paying off your loans fast and early, you’ll be able to avoid paying thousands of extra dollars in interest.

Make sure you set debt pay off goals, create a realistic debt repayment strategy to pay off your debt as soon as possible and track your progress! Paying off debt takes a lot of self control, discipline and sacrifice, but it is 100% worth it!

Learn how I was able to pay off $38,000 worth of debt in just over two years with these 8 debt pay off strategies!

9. Get a side hustle

There are so many ways to make money on the side to increase your income! Babysitting, walking dogs, blogging, becoming a virtual assistant, selling your clothes, driving for Uber, teaching kids virtually, designing printables or digital products to sell on Etsy, and so much more!

Getting a side gig is the perfect way to earn extra money to help you pay for groceries, rent, activities, or eating out! Most of these side hustles could even turn into a full time income if you’d like it too!

Think about what you love to do and find a way to monetize it!

10. Learn about Investing

Investing is something everyone should take advantage of starting in their 20’s or as early as possible. This is one of those topics that isn’t talked about enough in school and I wish it was!

There should be a mandatory financial literacy class in high school or a Gen Ed in college that teaches everyone smart money habits, including how to invest, when to start investing, different types of investments, etc.

Here’s a great article that goes over investing for beginners and everything you need to know to get started. It’s an easy read and answers all the investing questions you’re probably wondering about! I’m still learning and want to continue learning about investing and growing my money in the coming year.