1. Make saving an automatic habit
Every payday, make sure the first bill you pay is paid to your savings account. Over time, the transactions you put into your savings account should become second nature, especially if you don’t have an emergency fund set up yet. The best way to ensure that you can easily transfer money from your paycheck into your savings account is with an online savings account. Oftentimes—if you have a bank account—you can set up a savings account dually with your checking account. According to Consumerism Commentary, the best savings accounts are those that offer great customer service and high interest rates (high-yielding).
2. Manage Your Spending
So you head to the mall to buy that pair of shoes you need for a wedding this weekend, but then you see another cute pair for 50% off. You want both pairs but you had only planned on spending the money for that one pair. What to do? To avoid that feeling of regret the next day, only buy what you intended to buy. If later you actually do need the shoes, they will probably still be there, and perhaps additionally discounted. Be conscious of your spending by making a list when you shop, sticking to it, and avoiding the mall or other shopping areas unless you’re making a practical purchase.
3. Evaluate your expenses
Keep track of your expenses, and evaluate just exactly how you spend your money. After you know where your money is going, determine which expenses are necessities and which are more flexible. Look for areas where you could reduce spending and not be too affected.
4. Invest in your future
It’s never too late to think about investing for your retirement. Even if your retirement isn’t even on your radar yet, planning for your future and retirement fund isn’t such a farfetched decision. In fact, beginning to invest in your 20s will allow your investments to compound a lot more over time. Zenhabits suggests starting by increasing your 401(K) to the maximum limit that your company matches. If that’s not available to you, the next best bet is probably a Roth IRA.
5. Keep yourself and your family secure
If you share expenses with a significant other, loved one or if you have dependents, then it’s even more pertinent to develop these financial habits. First and foremost, you should have a safety net for you and any other dependents you have. Make sure you have an emergency fund. After you have an emergency fund saved up, look into life insurance. Again, if you have a spouse or dependents, look into writing a will. You can never be too prepared.