5 Money Habits to Master in Your 20s Without Sacrificing Your Coffee Budget
Welcome to #Adulting, the ultimate breakdown of all your grown-up needs. These articles are here to help you feel less alone and answer all your personal, financial, and career questions that weren't answered in school (no judgment, we get it!). Whether you're looking to find out how to tackle laundry or you want a deep breakdown on how to make a savings plan—we've got you covered. Come back every month to find out what life skills we're upgrading next and how.
Throughout my 20s, I'll admit that I wasn't the best with finances. I'd spend my savings on thrift store shopping sprees and buy Starbucks almost every day. It wasn't until I lived with my partner that I realized, "Holy crap, I'm awful with money."
So I decided to read up on all those financial books my mom gave me that were collecting dust on my shelves. I'd read books from the experts like Farnoosh Torabi, Jen Sincero, and Erin Lowry. Days after pouring over their words, I'd write everything I could remember if it meant I wouldn't keep screwing up. After that, I called everyone I knew, from my older siblings to my parents to even my distant uncles. I desperately wanted to see what financial tips they wish they knew at my age.
After a few months, I saw a shift in my spending habits. I'd pack lunch, rather than buying a $15 salad. I set aside time to look over my statements, instead of crying over having less than $10 to my name. The thing is, if we figure these out in our 20s, we'll be set later in life. Why not start now? Here are five money habits that have already saved my twenties.
Put 20 to 30% in savings
Jamila Souffrant, DCU budgeting expert and founder of the popular Journey To Launch podcast, says to utilize the 50-30-20 rule. "[Use the rule] as a starting point and adjust to meet your specific goals. Essentially, your 'needs' should not exceed 50 percent of your after-tax income. Then, your 'wants' should not exceed 30 percent of your after-tax income. Finally, the remaining 20 percent of your after-tax income should be put into your savings account or used for paying off debt." However, the way I've been doing it is putting 30% in savings, with 10% of that going into an emergency fund.
Another simple way to save more without thinking about it is through the app, Acorn. Say you spend $4.84 on a coffee, Acorn can put the 16 cents into savings. It's a no-brainer when it comes to savings!
Chart your monthly statements
One of the best pieces of advice I received was within the first five pages of Farnoosh Torabi's book, You're So Money. She stated that at the beginning of every month, set aside time to look at your statement. When you look over your last month's statements, categorize them into a Google Sheet. The categories she says to use are "needs" and "wants."
Within the "needs" column, you put down everything you need to live. These include bills, groceries, gas, and anything you used to live properly. With "wants," they range from everything like shopping sprees, coffees, takeout, and all the amenities you want. I added another group to my column, which is my "work expenses," such as my website, supplies, and subscriptions.
Chelsie Moore CFP®, CFA, director, wealth management, and financial planner for Country Financial had a few things to say on the subject. "Get organized and gather your data. Pull all of your information together in one place. Write down all of your nets; monthly payments; interest rates; amounts you borrowed; assets (retirement accounts, savings accounts, cash, house, cars, etc…)," she says. "This gives you the foundation you need to take a step forward. It helps track and celebrate progress and teaches us responsibility and organization."
After you organize them into columns, you add them up and see what you spend the most on. Because of this, I saw I was spending at least $250 a month on Panera. Doing this makes you reflect on what you need to cut out and how to save for the following months.
Make weekly budgets
We all attempt it, but rarely go through with it. Now is the time to do it, properly, this time. According to AARP, the first step is to set your income: whether you get paid weekly or bi-weekly. After that, separate weekly expenses into possible upcoming bills, food, transportation, and wants. Now sticking to it is the hard part, and these tricks will help.
How to stick to a budget:
● Remind yourself of your financial goals: buying a house, travel, retirement.
● Reward yourself if you stay under budget.
● Take out the cash from your debit card and keep your card in the freezer until the week is up.
Lindsay Bryan-Podvin, LMSW, financial therapist, says the key to doing this right is to be kind to yourself. "Practice self-compassion when you make a mistake—because you will make money mistakes. Rather than go down the doom and gloom spiral of, 'I can't stick to a budget! I'm terrible at money,' use the mistake as a learning opportunity. What happens when you look at that money mistake with compassionate curiosity? As in, 'What might have contributed to me overspending on clothes last month?'"
Track monthly subscriptions
Nothing is more infuriating when you get money taken out when you didn't plan for it. For example, when $30 was taken out of your account because you forgot to cancel that beauty box subscription. Sadly, there are some months that you can't budget for it, yet forget to pause it. Luckily, some amazing people made apps like Truebill and Bobby, so that never happens again.
How to manage monthly subscriptions.
● Write the amount of the subscription.
● The date it gets taken out.
● What the subscription is.
Harry N. Stout, author, and founder of FinancialVerse, says, "Consider everything from unneeded monthly subscriptions to the major decisions in life such as where to live and how to live—the lifestyle decisions. Saving money on recurring expenses can have a profoundly positive impact on your cash flow and savings. A deep dive into your spending habits can begin this journey for you." Either way, tracking your subscriptions is the easiest way to control your money.
Save money on food
Between takeout, groceries, and meal kit deliveries, we spend a ridiculous amount on food. It seems nearly impossible to save but nearly is the keyword here. A key money habit to master early on is saving money on food. The two best ways to go about it are getting a grocery membership card and signing up for restaurant newsletters.
Where I live, we have a grocery store called Giant Eagle, where you can sign up for a membership card. With this, you save on food deals and even gas prices. Looking for your regional grocery store is step one, then signing up for a membership is step two. After that, you're all set and ready to save on a basic necessity like food.
As for restaurant newsletters, restaurants have so many deals that only people on the newsletter get notified of. Make a whole other email if you need to, but get those deals.