It’s never too late to start saving.
Any habits that you start now, you will carry with you for the rest of your life.
And money happens to play a huge role in life, so the sooner you get your finances together, the better your life will be.
After leaving the stability of a 9-5 office job and pursuing a location independent lifestyle, I knew nothing about money. I racked up a lot of credit card debt due to my poor spending habits. Then one day, I took a step back and reevaluated my life.
I learned everything I could about personal finance. I cut back my expenses and worked hard to build up my net income. I took several freelance writing jobs, started a blog and then learned how to make mony blogging. Now, at age 25, I’m making and saving more money than I ever thought possible. I was able to pay off all of my debt in just one year and start saving for the future.
If I can do this, you can too!
Take the time to learn about saving money and get on track for life.
Financial Habits You Can Start Right Now
1. Make a Plan to Get Out of Debt
I hate to break it to you, but your debt isn’t going to go away on it’s own. And there will never be a better time to start getting out of debt than right NOW. Your responsibilities and stress-levels are only going to increase from here.
Create your get out of debt plan and do whatever it takes to get back on track. Try renting out your spare room on Airbnb, take a second job, become a driver for Uber, do surveys online or start your own blog and most importantly, cut your spending habits!
Move back home with your parents, start your own blog or cut your spending habits.
Something that really worked for me is called the “Debt Snowball Method” which is designed to help you stay motivated while paying off your debt. You start paying off the smallest debt and work your way up.
Doesn’t it make more sense to start paying off your debt with the highest interest rate first?
But paying off the small debt first gives you quick wins and helps you see the progress that you are making and allow you to get the job done.
2. Pay Off Your Credit Cards Every Month
If you are not currently in debt, then you should get in the habit of paying off your credit card bill every month. Not just the minimum payment, but the entire bill.
And I don’t mean to sound harsh, but if you can’t afford to pay off your credit card every month, then you shouldn’t have a credit card to begin with.
Take this from someone who has been there – credit card debt adds up really quickly and the interest is high. Don’t get in the habit of spending more money than you have. This will not end well.
3. Create a Budget Plan
If you want to manage your finances, you need to understand your cash flow. And if you want to understand your cash flow, you need to create a budget.
The first step is to figure out your net income and identify how much money you have coming in. And don’t confuse your net income with your total salary – make sure you subtract all of your deductions for taxes, pension plans etc.
Once you’ve found your net income, you need to track and categorize all of your spending habits. Doing this will help you see where all of your money is going and allow you to identify where you need to cut back or make adjustments.
I found budget spreadsheets to be extremely helpful when I was learning how to budget. Having my income and all of my expenses clearly laid out in front of me was exactly what I needed to cut back my spending habits… even though it was an eye-opening experience to see how much I spend on ice coffee every month.
4. Set Financial Goals
After you start creating a budget plan, you need to set your financial goals. So take a step back and decide what you’re saving for and what you want most in life.
I like to organize my financial goals into two categories; Short Term Goals and Long Term Goals.
Short term goals include anything that I want to achieve within one year, like paying off credit card debt or saving money for travel. Long term goals include anything that I want to achieve within my lifetime, like saving for retirement or to buy a house.
Financial goals will be different for everybody but keeping track of them will help you achieve the life you want and allow you to live with fewer regrets!
5. Create an Emergency Fund
Think about this: half of all people living in Canada and the United States could not afford to pay their bills if their pay was delayed by two weeks.
While it may seem more important to pay off student loans or save for that exciting trip you want to take – you should focus on building an emergency fund if you don’t have one already.
Whatever amount you can afford to set aside, save it. Over time, your cash cushion will increase and you might even get inspired to start saving more. You can even use your emergency fund as a travel fund!
But at the very least, when an emergency happens, you’ll be ready. Not many people in their 20s can say that. Be one that can.
6. Check Your Credit Score
Just like you review your bank statements and credit card bills, you should be checking your credit score regularly.
Your credit score is based on your past spending habits and and is used to determine your current financial standing.
Reviewing your credit score will give you a detailed report of your credit history and an idea of your ability to take on new debt – like a car loan or a credit card. It will also give you the chance to look for any errors or inaccuracies.
Understanding your credit score will help you be in the know of your financial situation and help you plan for the future.
7. Stop Comparing Yourself
Remember that financial success is not a race.
Maybe your friends are going to Mexico in a couple weeks and you can’t afford to go with them. If you need to pay off your student loans and skip the trip, don’t be ashamed of that.
Don’t compare short-term financial wins when you literally have your whole life to prepare for. Your hard work and smart financial habits will pay off.
You’re young! There is never going to be a better time to get your financial habits together than right now.
If the spender and debt sufferer in me can turn into a financial wiz and pay off all of my debt in less than one year, you can do it too!
Make sure you join my Secret Library to access all of my free and exclusive content like a budget tracking printable! As always, if you have any questions, shoot me a message.
What are your best financial tips?