Category Archives: Money

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.

Gone are the days of receiving bank statements in the mail, having to drive to the ATM to check your balance and writing checks at the grocery store checkout. Today’s consumers have access to anything and everything related to their money right at their fingertips.

Using Banking Websites

Any respectable banking institution has a website and a mobile app where one can login and view account information, make payments and transfers, even deposit checks electronically. Of course, these modern conveniences do come with their set of issues and concerns and having to remember multiple user names and passwords for each of your online accounts is one of them. Plus, you still don’t get to see the full picture of your finances by simply checking each of your accounts individually. Thankfully, now there is an entirely new set of tools to help you see the true bottom line!

Free Money Management Apps

Mint, Personal Capital and Empower are just a few of the web-based personal financial management services available to consumers free of charge. They allow you to see all your accounts in one place, including checking, savings, credit cards, investments, mortgage, bank and car loans, even your Paypal balance. You can also add such items as real estate property and vehicles you own. Doing so will allow you to see your true net worth by subtracting all your debts from your assets.

Budgeting Made Easy

Another great feature offered by these money management tools is budgeting. The tools come with some preset budget amounts and categories such as groceries, restaurants, coffee shops, gas, clothing, and entertainment, but the feature is entirely customizable. You can create new categories and adjust the budget amounts allocated to each category. Easy-to-read graphs show you at a glance where you are spending-wise compared to the preset budget for the month. Other useful charts highlight your credit card vs. cash ratio, and overall income vs. spending for the month.

Other Benefits

The apps will also remind you of upcoming bill due dates, and allow you to set up other types of notifications that you may be interested in receiving. You may also see tailored offers sprinkled amongst your financial information, and even though they may become annoying at times, keep in mind that advertising is what feeds the developers of these money management services and allow them to offer the tools free of charge. Additionally, you may actually find some of these offers useful – for example I learned about Stash, which is a great investment tool, through an offer in my Mint app.

Setting Up Your Money Management Service

The initial set up of the tool would require a little bit of extra effort as you will need to add all your accounts by providing the name of the bank or financial institution, and the corresponding user name and password. These login details get saved however, so going forward you will only need to remember the password for the tool. This is one of the best aspects of utilizing a money management service.

While Mint offers both a web-based and a mobile app version, other tools such as Empower exist solely as apps for your smart phone. Keep this in mind when choosing the money management tool that would best fit your financial goals and lifestyle.