As you’re transitioning into adulthood, now is a great time to start building solid financial habits. Managing your money in your 20s might feel challenging at first, but the habits that you build now can last a lifetime. This is a decade of firsts and major life decisions. Whether you’re starting your career, traveling the world, furthering your education, or getting married and putting down roots, there are healthy money management habits that’ll help you meet your goals both now and later.

Financial Tips for Those in Their Twenties

Learn how to live within your means

If you ask any financial advisor what one piece of advice they have for people starting on their financial journey, they’ll say budget, budget, budget. Learning how to set a budget and living within your means will help you get ahead and stay ahead. This can help you avoid the vicious and stressful cycle of living paycheck to paycheck, an unsustainable way of life. Last year, CareerBuilder found that 78% of workers in the United States were living paycheck to paycheck.

When you don’t take the time to set a budget and learn to live within your means, something simple like an unexpected medical expense or job loss can quickly derail your finances. Give yourself a boost, and a solid head start, by getting ahead of these problems now. Budget, budget, budget. There are plenty of budgeting methods to choose from, but the 50/20/30 method may be the easiest one to start with.

Save as often as you can

As you get used to your newly implemented budgeting method, now is also an excellent time to develop healthy savings habits. Start by building an emergency savings fund so that you have reserves that will cover unexpected expenses like the ones listed above (medical expenses, job losses, etc.) This should be your first savings priority. If you work better when things are automated, talk to your HR department or paycheck processor about sending part of each paycheck directly into your savings. You can also set up automatic transfers from your checking to savings with most banks.

Take advantage of compound interest 

Retirement may feel like it’s lightyears away, but inevitably, the time will come, and it’s best to be prepared when it does. If your employer offers a 401K match, meet with them to set up your account right away. If you’re an entrepreneur or work in a field that doesn’t offer retirement savings as one of your benefits, set up a retirement account of your own. Roth IRAs operate by taking advantage of after-tax money, so that money grows tax-free in your account. Setting one up while you’re young is a great way to take advantage of the life-changing magic of compound interest.

Do your research before making major purchases

There may be a fancy vacation or a shiny new car you’ve been dreaming about, but you’re holding off because you’re not sure you can handle it financially. Rather than avoiding major purchases, or emptying your bank account on them, try to find some middle ground. The prospect of buying a used car may feel a little less exciting at first, but it can save you thousands. Within the first year of owning a new car, it loses 50% of its value. Since it’s a depreciating asset, most financial experts suggest always buying pre-owned.

Be mindful of minor purchases

While major purchases are sure to add up more quickly, minor ones can add up, too. This is particularly true in the case of minor sneaky purchases, like eating out and subscription services. These costs tend to add up much more quickly than many of us realize. Even a daily trip to Starbucks for that beloved caramel macchiato can easily run you almost $5 per day. Multiply that by 365 and you have spent over $1,800 on a drink that you could have made for yourself at home for far less. To combat these costs depleting your savings and setting you back, check in on your subscriptions and impulse purchases regularly. Cancel subscriptions that you don’t need and find ways to eliminate the temptation of tasty treats that you don’t need.

One good example of how these minor expenses can add up are those increasingly popular subscription meal boxes. They may be convenient, but they often cost just as much as dining out would, and many of their ingredients end up going to waste. Instead, practice mindful grocery shopping. 

Visit the grocery store with a grocery list, stick to it, and buy budget-friendly ingredients that can be used in multiple different meals. This is a great way to make the most of your grocery purchases. Other easy tips for managing your budget as a college student (or at any age in your 20s) include renting or buying things used (think textbooks), finding free entertainment, and learning how to meal prep.