7 Important Money Habits to Form in Your Twenties

Everyone might be saying that “30 is the new 20,” but in reality, your twenties are a prime time to start cultivating smart money habits. This is the period in which your career can really begin to grow, so don’t throw away the opportunity to save money and prepare for a financially secure future.

As you transition from being a teenager to a full-fledged adult, here are the top seven money habits you should embrace if you want to build wealth, credit, and stability.

1. Track Every Dime You Spend

If you can’t account for the last $100 you spent, then you aren’t monitoring your money closely enough. Now is the time to learn budgeting skills, and you can’t do that unless you track your spending daily. Whether you use an app that automatically logs your charges or you manually update a spreadsheet once a week, make sure that you know exactly where your money is going. That is the first, and arguably the most important, step to becoming financially responsible.

2. Start Contributing to a Retirement Fund 

When you’re in your twenties, it may seem like retirement is eons away. However, this is the best time to start saving for your future years. As CNN Money says, the best time to start socking away retirement funds is “as soon as you can.” And there will never be an easier time to save. Once you have a mortgage, kids, and tuition to pay, it will only keep getting harder and harder.

The sooner you put funds into a retirement account, the more time those funds have to grow. Aim to put away at least 10 percent of your annual income into a 401(k) or IRA account. You’ll thank yourself later.

3. Figure Out What Food Budget Works for You – And Stick to It

According to the Bureau of Labor Statistics, the typical American household spends over $7,000 on food each year. While you’re still young and relatively unburdened by other expenses, learn to eat on a strict budget. Eat at home often and limit your grocery budget to necessities. The better you become at maximizing your food budget while you’re young, the more money you’ll have for other expenses when you’re older.

4. Build Up Your Emergency Fund Every Month

The median balance of all American savings accounts is only $5,200. For most, that would only cover a few months of living expenses. A good rule of thumb to live by in your twenties is to have at least six months of living expenses saved so that you can feasibly handle any layoffs, moves, or emergencies that come your way.

5. Find a Side Hustle You Can Rely On

In today’s economy, everyone should be able to make money quickly on the side if necessary. Your twenties provide a time in which you can develop additional skills and work on finding a profitable side gig that you enjoy.  Do you love writing? Look into creating content on a freelance website. Do you have an interest in music? Teach guitar lessons on the weekends. You’ll find that a little bit of extra income goes a long way, especially in desperate situations like recessions or layoffs.

6. Try Not to Spend Money You Don’t Have in the Bank

Unless you’re applying for a car or home loan, you probably shouldn’t be spending more money than you have. That’s why credit cards are so dangerous; people see their high spending limit and wind up with a bill that’s higher than their bank account balance. High-interest rates cause you to eventually pay off your balance, plus some extra. Be safe and only spend what you can afford to pay off today.

7. Learn to Ignore Peer Pressure in Regards to Spending

Just because your friend drops $70 at the bar every weekend doesn’t mean that you should. Your twenties can be challenging because everyone is at a different financial point, but the important thing is to find a budget and lifestyle that works for you. Don’t let the spending habits of others pressure you into making poor financial decisions.

As long as you abide by these seven habits, you’ll find that saving and avoiding financial trouble is entirely doable, even on a low salary. Remember that being financially-responsible doesn’t mean that you’re wealthy; it means that you’re smart with the money you do have.

How to Better Track and End Automatic Sneaky Subscription Services

What better way to lose money than forget that you’re paying it? Many subscription models bank on two fundamental principles to squeeze extra payments from their customers. First, these companies hope that you’ll forget about that recurring credit card charge. Second, they make canceling a hassle, and hope that customers will give up instead of canceling their service.

Subscription services appeal to our love of convenience. Thousands of companies now offer a variety of subscription services. Companies such as Blue Apron, Hello Fresh, and Hungry Harvest deliver ready-to-make meals or produce to your doorstep for a recurring weekly or monthly charge, while other niche companies offer a variety of useful services. Have a dog? Bark Box will deliver treats and chew toys. Need to shave? Dollar Shave Club delivers shaving products straight to you at a discount. Pretty much anything you need can be delivered to your door.

Subscription-based companies hope you’ll love their product indefinitely…but that’s likely not the case. And when you’re ready to cancel, they hope that you’ll forget so they can squeeze a few more deliveries and earn those extra few dollars out of you. Here’s how to better track and end automatic subscription services.

Identify all Subscriptions Services Now

Before adding any more, sit down and identify all the subscription services you currently use. While most of us have entertainment subscription services (cable, shows, phone, music), you may currently enjoy others including some of the following:

  • Food: Blue Apron, Imperfect, MunchPak, MistoBox, Bon Appetit
  • Clothes: Stitch Fix, Kidbox, Trunk Club, Wantable
  • Pets: Kitnip Box, Bark Box, Rescue Box, Loot Pets, Pooch Perks
  • Personal Hygiene: Dollar Shave Club, Sudz Club, Smile Box
  • Creativity: Kiwi Crates, Darby Smart, Sketch Box, Creation Crate
  • Niche: Vella Box, Hippie Holiday, FabFitFun, BeautyArmy

Once you’ve identified them, quickly chart which services are weekly, biweekly, monthly, every three months, every six months, or yearly. Gather all the info, and then get ready to…

Read all the Fine Print

Before you agree to any subscription service, it’s imperative to read the small print. How often will your card be charged? When will it be charged? How do you cancel? When do you need to cancel to avoid an unwanted delivery? Know the rules before you sign up, or review the rules if you’re already signed up.

Immediately Make a Calendar Note

While knowing when the company will charge your card for their services for budget purposes, it’s more important to know when you need to cancel. So for example, if the company charges your card on the 15th of each month, but you need to cancel two weeks before this charge, you should make a note on your calendar that you’d need to cancel the service on the 1st of the month. You could also set a helpful reminder with Alexa or Siri. Forgetting this information would lead to an extra delivery or a late termination fee. Highlight this date so it pops and set it as a recurring notice. Review your calendar monthly to decide if you need to cancel any subscriptions.

Just Do It

When you decide to cancel, do it immediately. Don’t hem or haw. Be prepared to endure a maze of pressing buttons and waiting to talk to someone on the other end. Unfortunately, many services don’t allow customers to simply click and unsubscribe from their services; it’s part of their business model.

Trim

Trim exists as an AI assistant that works on your behalf to identify and cancel unwanted subscriptions and negotiate lower rates when possible on monthly services like cable. It was developed to help individuals stay on budget. Users must link accounts such as credit cards, so do your research to determine if Trim would be right for you. Reviews span the spectrum from great (saved the user money) to horrible (attempted to negotiate cable bill without user’s approval). The program is currently free to download, but will take a percentage of profit if it successfully lowers a bill.

On a final note: many companies offer discounts when you sign up if you subscribe on a three month, six month, or yearly basis. Watch for these subscriptions as the charges are easier to forget when they only happen twice or once a year. You may save on the monthly deliveries, but it’s easier to miss the cancelation period.

Introduction to Contract for Difference (CFD)

Many investors are looking for additional ways to trade and invest. One non-traditional form of trading are with Contract for Difference or CFD as they are most commonly called for short. CFDs are a way for European traders to profit from asset price movement without actually owning the underlying asset. They are basically computing only the price change and not the underlying value. They have become popular in recent years. There are sites for trading CFD that offer education and tools to begin your journey with CFD. Because CFD are a non-traditional form of investing, it is important to do your research and learn about their advantages and disadvantages.

Advantages

There are many advantages to CFD. One being that there is global market access. Because many brokers offer products from many of the world’s major markets it allows for you to have access all day/every day. Many world markets also have certain rules against shorting, but with CFD they can be shorted because you do not actually own the underlying asset. Another advantage is that with CFD brokers you are often given the same order types as traditional brokers but often with no or little fees. One thing that can be to your advantage is that with CFDs you are offered a variety of trading opportunities. Brokers offer stock, index, treasury, currency, sector and commodity CFDs to offer variety and diversity in their financial vehicle investments.

Disadvantages

While CFDs offer an attractive alternative to traditional markets, they also present potential pitfalls. One downside to CFDs is that traders pay the spread on entries and exits that take away potential for you to profit from small moves. The spread also decreases winning and increase losses as well. So, while traditional markets expose the trader to fees, regulations, commissions and higher capital requirements, CFDs trims traders’ profits through spread costs. A disadvantage to CFD trading is that the market is not highly regulated. This is a disadvantage to investors because they could find themselves in trouble if not monitoring their investments properly or get into a relationship with a unreliable broker. Brokers in this industry do not need to meet certain regulations enforced by the government but rather credibility is based on reputation and financial position. Because of this you need to do your homework and make sure you are working with a proper broker.

The bottom line is that CFDs offer a great alternative to traditional investment vehicles but it is important to do your due diligence prior to investment.

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