Simple Money Habits That Make A Big Difference In Life
Navigating personal finance can be challenging, but now is the perfect time to lay a strong foundation for your future.
In this post, you’ll find seven smart financial tips tailored to young adults. From mastering budgeting to enhancing your financial literacy, these practical pieces of advice will set you on the path to success with money.
You can learn from and copy the exact habits and strategies I adopted so you can achieve your financial goals, too. Let’s get started.
Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.
Financial Tips For Young Adults To Get Ahead With Money
1. Build A Better Budget
Set a budget every month and do your best to stick to it.
Break your spending down into categories such as:
- Housing (rent or mortgage)
- Utilities
- Groceries
- Transportation
- Entertainment
- Travel
At the end of each month, compare your spending to your budget for each category. Reflect on your progress and make adjustments as needed.
Don’t beat yourself up if you overspend. Learn from it and strive to do better in the future. When you have success, set a little money aside to reward yourself for a well-done job.
Related tips – Top Habits of People Who Always Have Money
2. Boost Your Income Today To Have A Wealthier Tomorrow
Your earnings are the engine that propels you to financial freedom. Thus, consider ways to make more money. For example,
Ask for a raise. Get paid more for doing what you do today.
Earn a promotion at your current employer. Seek higher levels of responsibility and the compensation that comes with it.
Change jobs. Pursue more money for the value you provide by working for someone or someplace new.
Make extra money by starting a side hustle or small business.
Must read – How To Stay Consistent with Your Financial Goals
3. Trim The Fat: Practice The Art Of Spending Less
Financial freedom comes only to those who live below their means. Thus, your expenses must be less than your earnings.
Housing, food, and transportation will typically consume most of your budget. Seek ways to reduce expenses in these areas.
Next, think carefully about what you value in life. What you love may include travel, movies, home renovations, dining out, wine, sporting events, or something else.
What you value is unique to you. So, whatever it is, allocate money in your budget to what you love. Then, reduce or eliminate expenses everywhere else.
Must read – How To Stop the Living Paycheck to Paycheck Cycle
4. By Spending Less, You Can SAVE The Rest
Don’t let an emergency derail your finances. I recommend assigning any extra money from your monthly budget to emergency savings.
Most financial experts suggest having 3-6 months of living expenses available. Review your budget’s essential monthly expenses to determine your optimal emergency fund balance. Put the extra money in a high-interest-bearing savings or money market account.
Reserve your emergency fund for unexpected and vital expenses like:
- Medical bills
- Auto repairs
- Home maintenance
Okay. So far, so good. I have three more financial tips to come, but before you continue, PIN IT so you can return later:
5. Double Down And Ditch The Debt
Identify and itemize your debts. Reduce your non-mortgage debt by using any excess cash identified from your monthly budgeting process.
Most young adults owe money for:
- Credit cards
- Student loans
- Auto loans
- Personal loans
Pay off your credit cards first. Then, target any other loans you have. Making timely payments will improve your credit score.
6. Follow The Smart Money And Invest Wisely
Suppose you have money left over each month at this point, then congratulations. You are on your way to financial security.
However, your work is not done. Effective money management requires investing money wisely.
Your first three investing goals should be:
1. Maximize contributions to your employer’s 401(k) or 403(b) retirement plan.
2. Fully fund an individual retirement account (IRA).
3. Make additional investments outside of your retirement accounts.
Focus your investments on stocks or low-cost exchange-traded funds (ETFs) invested in the broad stock market for long-term capital appreciation. I also recommend dividend investing and dividend stocks for passive income.
Start investing young and learn all you can to build up your finances. You will be glad you did because time is one of the greatest assets in your youth.
Ready to learn more? Then check out the Financial Freedom Dividend Investing Course offered by Simply Investing.
Investing for dividends as a young adult is a great way to start.
7. Review, Reflect, Adapt, And Improve
Review the results of your financial planning at least annually. Make an honest assessment of your current state and how you are doing against your financial goals.
Ask yourself hard questions, such as:
Did I stick to my budget? If not, why and what can I do to reduce my spending?
Am I making as much money as I deserve? How can I make more?
Is my emergency fund adequate?
Am I steadily reducing debt?
With any money left over, am I investing it wisely? What types of investments should I have at this stage in life? How are my investments performing?
Dig Deeper – Easy Investing Tips for Beginners
Most importantly, people who enjoy the benefits of financial independence routinely ask themselves these questions.
Smart Financial Tips For Young Adults – Wrap-Up
You now have the framework for achieving financial success:
- Build your budget
- Maximize your earnings
- Reduce expenses
- Increase savings for emergencies
- Reduce debt
- Invest wisely
- Review and reflect often
That’s all for today. Thanks for reading. Before you go, PIN IT:
Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.