4 financial habits to develop in your 20s - young woman sitting at a desk taking notes and looking out the window

4 financial habits to develop in your 20s

Your 20s is a decade where many lifelong habits are developed. Young adults can expect to experience enormous growth professionally, personally and financially, as shared to NPR by clinical psychologist Meg Jay, author of “The Defining Decade: Why Your Twenties Matter—And How to Make the Most of Them Now”. As such, your 20s is a great time to create a strong financial foundation on which you can build for years to come.

Here are four financial habits that can benefit you for the rest of your life:

1. Start saving for retirement.

When you’re focused on the beginning of your career, as you are in your 20s, it can be hard to begin planning for the end of it. But, this is actually a great time to begin thinking about your departure from the workforce. Why? Because the earlier you start saving, the more money you could have during retirement.

There are plenty of options for retirement savings accounts. If your company offers a 401(k) with a matching program, take advantage of the free money. Otherwise, you can check out IRA options that you can open on your own. Whatever type of account you choose, the most important thing is that you’re saving.

If you would like to discuss the possibilities, a Financial Advisor could help provide useful guidance.

2. Keep your budget slim.

During your college years, you may have scrimped and saved whenever you could to keep your costs low. Don’t stop doing this just because you’re out of school and earning a regular paycheck. The money you save now can benefit you in the future, whether that’s in the form of a vacation you’ll take in six months, a car you’ll buy in five years or your child’s college education in 18 years.

One way to begin doing this is to review credit card and account statements at the end of every month. Highlight where you strayed from your budget and determine how you can avoid that in the future. For example, did you spend too much on mid-week lunches? Make a goal to begin bringing your own. Did you spend more on your car than you expected? Try carpooling with co-workers or exploring public transportation options to cut costs in that area.

listening to music while reading a book

3. Organize your documents.

Over time, you’ll inevitably collect a variety of financial and legal documents. Whenever you start a new job, open a new bank account, buy a house or pay your taxes, you’ll deal with documents. When you make tax-deductible investments like a charitable contribution or a job-related move, you’ll also need to keep receipts.

In addition to the paperwork you’ll acquire over the years, you also have legal documents like your Social Security card, birth certificate and potentially your marriage license; each of these documents serves a specific purpose and should be stored safely. According to Business Insider, time limits for many of your important documents include:

  • Forever: tax returns, investment account annual statements, home purchase receipts and receipts for high-value items
  • Seven years: tax return preparation documents like 1099 statements, W-2s and charitable contribution receipts
  • One year: pay stubs, investment account statements, medical receipts and canceled checks

Don’t let these documents clutter up your kitchen counter or get lost in a disorganized box. Keeping them organized will help you ensure you always have access to critical information. Invest in a safe or locking file cabinet to keep your documents secure. Keeping your documents secure can also help prevent identity theft.

4. Identify specific financial goals.

We all have life goals. In your 20s, identify which ones are most important to you.

Is it to buy a house? Start a family? Begin a sports car collection? Retire to France one day? What about a hobby farm?

sitting on a park bench organizing finances during her lunch break

Whatever your major life goals are, identify them, estimate their cost and begin working toward them. Keep your savings dedicated to these goals in its own separate account; this will reduce your likelihood of spending it during a tough financial time or on a spontaneous large purchase. Plus, if you choose to keep your funds in interest-bearing saving accounts like a certificate of deposit or a money market account, you can watch your money grow in time.

Are you working to build better money habits? Open a savings account with OnPoint to make progress on your short- and long-term financial goals now.


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