I just want to start off by saying that I am a huge Dave Ramsey fan! He has taught me so much about how to save and I can proudly say that I am making a lot of progress towards my financial goals.
Money is a huge part of your life, so now is the time to start learning how to manage it. I have spent a lot of time learning about personal finance in recent years. It’s a topic that’s very important to me and is something I hold with high importance.
I am a college student so I definitely have to be smart about my money and find unique ways to save. That’s why I am excited to share these 10 tips I have learned along my financial journey with all of you!
10 Smart Money Habits You Need To Start In Your Twenties
If you learn how to budget in your 20s, then you are ahead of the game. Learning good financial habits now will serve you well into your future.
Budgets are great because they allow you to be mindful about your income and what you are spending your money on. It lays out exactly how much you can spend in each category, how much you can save to reach a certain goal, what areas need to be analyzed, etc.
I use a monthly budget printable to track my finances, but there are plenty of digital options as well.
Build an Emergency Fund
Dave Ramsey suggests putting $1,000 in your emergency fund account to start, although if you are living paycheck-to-paycheck then that can be very hard to achieve. I would suggest putting in as much as you can afford every month until you reach your target amount. You can also take on some side jobs to help build your emergency fund faster.
Student Loan Refinance
Student loan refinancing is a great decision that allows you to lower your interest rate on your student loans. Although it can be a long and complicated process, it is worth it because it may help you pay off your student loans quicker.
By refinancing your student loans, you may obtain lower monthly payments, lower interest rates, and more benefits.
Also, a lot of companies charge no fees to apply and get a quote, so it’s definitely worth looking into.
Track your credit score
Even if you don’t have a lot of debt, it’s important to get into the habit of checking your credit report regularly. You want to know that 3-digit number so if it’s on the low end, then you can create an action plan to raise it. By monitoring your credit score, you can identify factors that make your score rise and fall. It’s important to check and manage early on or else you may end up paying for it in the long run.
Organize and track your finances
It’s important to consistently track your finances – expenses, spending, debt, credit score, net worth and more – so you can set financial goals and actively work towards them. Creating a budget is the best way to monitor your income and what you are spending your money on so you don’t end up in debt or a worse financial situation. You could use an app like Mint or a budget printable.
I also have an app on my phone through my bank that reports all of my financial history, what I spend my money on, how much I spend and much more. I monitor it daily to make sure my finances are in check.
Read Personal Finance Books
I will admit that I am not the most finance-savvy person in the universe. I think I have done pretty well in my 21 years of living, but I still have a long way to go and a lot to learn. That’s why I believe it’s important to read some personal finance books so you get a solid foundation and can learn from experts in the industry. I think it’s especially important when making financial decisions that will impact your future.
I am a complete Dave Ramsey fan, so any of his books are a good read. I have his book, “Complete Guide to Money” on my bookshelf. If you know of any other great personal finance books, comment them under this post!
Pay off those credit cards
Get in the habit of paying off your credit cards monthly or as soon as you can, and if you can’t manage that then I would suggest getting rid of them. You are better off without them. Credit card debt compounds fast and the interest is high. It’s like a snowball that keeps getting bigger and bigger until it’s out of control.
I have never had a credit card and I don’t plan on having one anytime soon. It’s too tempting for me to buy everything, so I don’t want to put myself in that situation. My debit card and cash works fine enough for me.
Save for retirement
Take advantage of compound interest over time by saving for retirement now. You won’t earn as much if you wait. Talk to your employer and see if they offer a retirement plan with matching funds. If they don’t then you’ll need to open a brokerage account to buy investments. The best place to open one depends on what you’re looking for and the cost. Find what works for you and start investing in your future now.
I don’t suggest investing in the stock market in your 20’s unless you really know what you’re doing. But, a good alternative is investing in bitcoin. I have never actually bought bitcoin but I have a lot of friends who do and have already received thousands of dollars. I read an article about a kid who started when he was 15 and is now a multimillionaire! Bitcoin prices go up every year and the industry is booming so now is your chance.
Plan for your future
Create financial goals that will benefit you in the long run. Look deep inside and ask yourself what want to accomplish the most throughout life. Once you set that vision, plan your finances accordingly. Do everything you can now to set yourself up for success in the future. Your will thank yourself later.