Money habits to form in your 20s

If you’re feeling overwhelmed by your finances, don’t think that you’re simply bad with money. Learning to manage your money and make the most of your income takes some basic knowledge and a lot of practice.

Thankfully, there are a few easy steps that you can start taking today that will put you in a better financial state tomorrow. Dedicate yourself to making these five money practices into habits, and before long, you’ll be the ones your friends refer to as “good with money.”

Here are 5 money habits to learn in your 20s:

1. Pay Yourself First
Consider contributions to your savings like any other bill. You pay your rent before you go blow the rest of your money on new shoes, right? (Hint: your answer should be a firm, “of course!”). Do the same with your savings and think of adding to your accounts as a bill your pay yourself.

2. Track Your Spending
You can’t improve your finances if you have no idea where your money goes every month. There are various ways to do this. Hang on to old receipts and plug the numbers into a spreadsheet if you’re a hands-on type of person. If you like everything digital, a service like Mint.com makes things easy and paperless as it helps track your spending.

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Once you realize your usual pre-work stop by Starbucks for a sandwich and coffee is costing you around $200 per month, you’ll be able to cut this wasteful spending out of your budget and save more instead.

3. Take Advantage of Free Money
Free money? It’s true: there are several ways you can take advantage of money that’s on the table. If you’re eligible for a 401k or other employer-sponsored plan through your work, make sure you contribute enough to get the employer match. You can also take advantage of rewards programs at retail stores that will save you on your purchases (or offer a free time after you’ve racked up enough points), or shop with cashback sites that will offer  you various percentages of cash back on every purchase.

4. Don’t Carry Balances on Your Credit Cards
Learn to avoid debt like your life depends on it – after all, your financial life really does. Be smart with credit cards if you use them. Never charge something you cannot afford and make sure you pay off your balances in full every month to avoid incurring interest.

5. Set Goals
You’re more likely to find success if you set goals and make a plan to achieve them. When it comes to your money, it’s important to know why you’re working so hard to earn more or why you’re diligently saving every last dollar. Your own goals will be personal and unique to you, but as soon as you set them, you’ll have given yourself something tangible and real to focus on. Nothing motivates you more like having a challenge to overcome or a milestone to reach.

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When you make these money habits your own, you’ll soon see how they have a positive impact on your finances. So don’t wait! Start putting these ideas into action and make the most of the time you have – you’ll be grateful you did when you make your financial dreams into realities.