Money habits of women who are never broke
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When you hit your 20s, it’s super important to develop good money habits. These habits are something that you can carry with you throughout your life. The sooner you start, the sooner you will reach your financial goals.
Your twenties are such a pivotal moment in life. You’re just getting started with a career, you might have some credit card debt, and probably have a boat load of student loans to pay off. You might just be starting to figure out how to budget, save, and spend your money.
All of these habits I have implemented in my life to reach my money goals. Money management is such an important habit to have and the younger you learn how to manage your money, the better.
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I’m covering 9 money habits you need to master your financial success.
1- Create a budget
Creating a budget is one of the most important parts of financial planning. Your financial plan should consist of spending less than what you earn. It is super important to know where your money is going each paycheck. This budget will establish spending limits so you are able to build your savings and pay down debt. A budget helps you set boundaries around how much you can and should be spending based on your income.
There are tons of apps and websites that can help when it comes to setting up a budget for yourself. PocketGuard is an app that connects to your credit, checking, and savings accounts and automatically tracks recurring paychecks and bills. It also tells you how much is available for everyday spending by subtracting upcoming bills, savings goal contributions and more!
2- Live below your means
One important money habit is to live below your means. This means that if you bring home $4,000 a month, you should not be spending more than $4,000 a month. You want to create a lifestyle for yourself that you are spending way less than what you are earning. This helps keep you away from living a paycheck-to-paycheck life.
Keep your expenses way below your monthly income. This can be easier said than done. But this means you might have to cut out that day after paycheck shopping spree, or the girls Saturday night out.
3- Start saving
Of course saving would be on this list! In your 20s you want to start planning for your future which means saving money for future goals such as a house, a wedding, and most importantly retirement.
Open up a savings account. I suggest a high yield savings account like one from Discover. This account YOU DO NOT TOUCH. The money goes in and it isn’t taken out until you need it for what you were saving for.
Even if you aren’t putting away a ton of money each month, anything is better than nothing! This will get you into a good habit of putting away a little bit each paycheck. Start with $50 a paycheck and then increase from there when you feel more comfortable.
What I like to do is automate my savings. That means, I have a certain amount of money automatically come out of my account each month and go right into my savings account.
4- Pay off credit cards
It’s so easy to get into credit card debt. According to Experian, the average 25 year old has $2,600 in credit card debt. Working an entry level job, paying off student loans, plus regular bills, this number can easily skyrocket. Then once you know it, you have tens of thousands of dollars in credit card debt which can be overwhelming and cause major stress!
The best way to pay off credit card debt is to pay it off in large chunks. For example, if you have $8,000 in credit card debt, split that into 4 payments of $2,000. So instead of looking at it like “OMG I have $8,000 I need to pay I’ll never pay this off” think of it as four payments of $2,000. This puts you into a better mindset and seems much more manageable to pay off.
If you have multiple credit cards, the best way to pay them off is using the snowball effect. This is paying off the smallest credit card first then the next smallest, etc. once you pay off the smallest it’s a small victory and puts you into a good mindset when it comes to paying off the debt.
Always pay more than the minimum balance due!
5- Set Goals
If you want to build wealth, you must have a set plan to achieve that wealth. Setting financial goals for yourself is so important, this can keep you motivated to eventually achieve those goals.
It’s important to note that no one’s goals look the same. Someones might be to save $10,000 in a year while another may be to pay off a $5,000 student loan. So don’t compare your financial goals to others.
Look at all your finances and figure out what goal you want to achieve whether it be long term like a year or short term like 3 months. Create a plan of what you need to do to reach that goal and stick with it. Keep yourself accountable!
If you don’t achieve the goal in your set time frame that is ok, don’t get discouraged and keep working at it!
6- Start investing
One important money habit I learned in my 20s is to make my money work for me. This is what investing is all about.
If you’re anything like me, you had absolutely no idea what the stock market was and how to invest. Basic investing is actually easier to understand then you might think. Compound interest is when your money is making money. Then that interest is making you even more money. The basis of investing right there!
Open up Google and start your research. The best beginners app is Robinhood and it will walk you through your first stock purchase!
7- Start an emergency fund
If you have no money saved away in case of emergencies, don’t worry you are not alone. Many Americans don’t have any money tucked away. Good thing is, that it is never too late to start your emergency fund.
Start with $500 and increase to at least $1,000 then continue to build from there. Keep it liquid so you have easy access to it. The unexpected can always happen such as a flat tire, sudden job loss, medical bill. You might never know when you really need that money!
8- Have a retirement plan
It’s never too early to start a retirement plan. The sooner you start the more you’ll have in the future. Your retirement plan might include a 401k from your company or a Roth IRA. Not a clue where to start? Educate yourself! Which you’ll read about next!
9- Educate yourself
The best thing you can invest in is your time and education. Educate yourself on ways you can save money, invest money, pay off debt, different types of retirement plans, etc. The list can go on and on. There will always be new opportunities to make and save money, so keep yourself educated!
The interest has so many blogs and websites that can teach you everything you need to know about finances.
There are also tons of personal finance advice books that are super helpful.
Here are a few I recommend: