As soon as you start earning a wage, you begin to learn the value of having money and having your own money. Up until this point, you may have been reliant on others to help fund your life.
Whether that’s whilst living with your parents, a student loan to keep you alive during studying away, or savings that might have been set aside for you that you could finally access when you turned 16, 18, or 21.
With that being said, it’s important to think about how you could best manage your money from the moment you start earning it. Having the right attitude toward money is something that’ll set you up for a more secure financial future.
Let’s take a look at some of the quiet money habits you could make to ensure your 20s and 30s are the financial foundations that set you up for life.
High-impact automated systems
Thankfully, we’ve got wonderful access to modern technology that generations before didn’t have the option of using. Automation is one of those handy advancements in technology that can make managing your money a lot easier and less stressful from your point of view.
The rainy day shield
An emergency fund is something you can’t afford to have nowadays. Ideally, you want to aim for an emergency fund that covers 3-6 months of living expenses, and that way, you avoid high-interest debt during unexpected events.
Whether it’s losing your job suddenly or unexpected bills that are coming in the post that are significant in amount, having an emergency fund will certainly provide peace of mind. No matter what financial hardships come your way, having an emergency fund that covers a good amount of your living expenses will really help.
Pay yourself first
You should be setting up automatic transfers to your savings or investment accounts immediately after receiving your paycheck. Aside from all of the necessary bills you are obliged to pay regardless, it’s also important to pay yourself a small amount, whether that goes into a savings pot or into an investment fund.
If you’re doing this every month, then you’ll very quickly build up a pot of savings as well as contribute to investments that will hopefully grow over time.
Automated bill pay
Late fees can ramp up very quickly if you’re not careful, which is why automated bill payments are important to set up so that you don’t miss those payments. Avoid late fees and protect your credit score with autopay services.
Be strategic with spending and awareness
Strategies when it comes to spending and being aware of your money are important. That’s why it’s good to check in on your bank accounts or adopt certain frameworks that help you improve your efforts towards saving and investing. Here are some of the ways you can improve your spending habits and boost your financial awareness.
The 24-hour rule
Waiting 24 hours before making any non-essential purchases is a good way to prevent any potential impulse buys from happening.
Weekly money check-ins
Spend just fifteen minutes once a week reviewing your transactions and being aware of any overspending or forgotten subscriptions before they become major issues on your cash flow. From a security point of view, checking your accounts for any fraudulent activity is also important.
The 50/30/20 framework
A common framework to adopt in your 20s and 30s is to allocate 50% of your income to needs, 30% to your wants, and 20% to savings and investing.
Avoid lifestyle inflation
If your income rises at any point, try to direct 30% to 50% of that increase towards savings or investments instead of immediately trying to upgrade your lifestyle.
Long-term growth habits to adopt
While these are great to adopt initially, it’s all about making sure you have long-term habits that continue to grow your wealth. Let’s take a look at some of the long-term growth habits you can adopt.
Prioritize high-interest debt
It’s helpful to use the avalanche method when it comes to paying off debts, dealing with the ones that have the highest rates first to minimize the total amount you end up paying over time.
There are times when debt can be crippling, and for some, exploring the financial options available may seem like a real headache. That’s why it’s a good idea to get in touch with financial advisors and those who can help you navigate out of a serious financial situation.
Max out your employer’s contributions to pensions
Whoever you’re employed by, it’s good to try to max out your employer’s contributions to any pension pot you currently have. If your employer offers a retirement contribution match, then you should be putting in the full amount required to get the full amount matched by your employer.
That’s going to help greatly when it comes to getting a healthy pension to retire on. It’s also worth having a private pension to help provide more security during your retirement. Having two pensions is better than just relying on one.
Consistent index investing
Rather than trying to time the market to invest, you should make use of low-cost global index funds to capture long-term growth across lots of different companies.
There are, of course, plenty of different investment opportunities, and as your funds grow, it’s good to explore bigger investments like investment into real estate or high-value assets, both tangible and non-tangible.
Focus on high-income skills
Improving your earning power can be achieved by gaining new certifications or skills. Having such certifications and skills can help provide a higher return on effort, rather than obsessing over small investment gains.
Find side hustles where you can and make more of your time when it comes to earning money. Sometimes, it can be the side hustles that end up making you big money, and on some occasions, setting you up for life.
These quiet money habits are just a dip in the ocean of what you can achieve if you’re good with your money. As soon as you can start saving and investing your money, do so.