If we’re not careful with spending habits, the phrase “where does the time go?” can easily be applied to “Where does the money go?”. And this applies to the old and the young, so it pays to start early with good financial habits.

 

• Know your credit score
  • If you aren’t already building credit, it might be time to start since your score is based on your longest-held line of credit (credit card, loan, etc.)
  • If you’re looking to boost your score, focus on always making timely payments

 

• Know your debt-to-income ratio
  • When paychecks start coming in, it’s easy to spend it on either an expensive lifestyle or across so many small items you lose track, so be aware of what you’re making and what you owe
  • As the market fluctuates and inflation increases costs, it’s important to be aware of what you owe and what you’re bringing in

 

• Set and stick to a budget
  • Old school planners suggest sticking to the 50/30/20 rule: 50% Needs, 30% Desires, 20% Savings
  • Stay on top of living expenses and periodically look for ways to lower them, which can make more important purchases easier to handle

 

• Create and fund an emergency account
  • No one predicted the latest pandemic, but many wish they were better prepared, so it might make sense to start your fund and don’t dip in unless it’s an emergency.
  • Think beyond an emergency with this money and prepare for a rainy day – consider using a small portion for a last-minute vacation or a visit home to see family and friends

 

• Start saving for retirement
  • The earlier you start saving for retirement, the longer it may potentially grow and the more you could possibly have, so set yourself up early in life.
  • As we age, the unexpected happens, with medical and healthcare costs taking a chunk out of our savings, so setting up your retirement nest egg is a smart strategy

 

Adapted from Tavaga2

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2 https://tavaga.com/blog/millennials-and-money-5-financial-tips-for-young-adults/