5 Finance Tips You Should Implement Before You Turn 25

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Your twenties may be the most important decade of your life. The standard trajectory for most people involves graduating from college, landing a big job, and starting a financial journey that will continue on for years to come. A lot of things have changed since our parents’ time—while some things are seemingly more financially challenging to accomplish, there are also a lot more resources to help us get by.

But it’s important to start as early as possible so that you’re not left scrambling to lay down the groundwork for your financial independence at the last minute. Time moves seemingly faster during this time of your life, so you need to act with at least some sense of urgency. Before you turn 25, here are five personal finance tips that you should implement in order to maximize your financial situation:

#1 Track your spending

It’s easy to get lost track of how much money you spend, especially at the beginning of your career when you’re just starting to earn your own income. It’s important to practice responsible spending to avoid the debts from piling up early on. That’s why you should always track your spending. Create a general outline using a spreadsheet, or use a digital tracker that allows you to see all of the numbers.

Examine your cash flow from week to week and identify the places where your spending might be wasteful. Then, see if you can cut back or reorganize your funds to balance everything out. For example, if you find that a good 15% of your earnings are going straight to food delivery, maybe that’s a perfect opportunity for you to cut back. Being mindful of even little things like that can go a long way.

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#2 Invest for the future

Now that you’re making your own money, it’s important to start investing it. Many individuals from older generations will tell you their one regret is that they didn’t start saving and investing money sooner. Once you land a job and the income is steady, it’s easy to think that the money will always be there, but obviously, that isn’t the case. You won’t have that job forever, and in most cases, saving for retirement takes longer than you think.

While you’re still in your twenties, you should think about investing in the market or starting up a high-yield savings account. You should also look into retirement plans, whether with your company or with another institution. These are just some examples In order to determine which investments and account types make the most sense for you, you should look at your short- and long-term financial goals.

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#3 Keep like-minded friends

Obviously, this is not a requirement, but it always helps to have friends who have similar financial goals and who support you in yours. A lot of our spending habits are influenced by our social lives anyway, so having responsible friends can help reinforce good habits. Whether your friends remind you to use the coupons you got in the mail, or that you still owe them for the concert you went to last week, the support they provide to help you keep your spending on track is helpful.

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#4 Ask for raises

Millennials are bound to change jobs at least once or twice in their careers. Whenever a new opportunity arises, it’s always important to consider all the aspects of the deal very carefully before making a decision. What does the compensation package offer in terms of salary, bonuses, and vacation time? Also, how good are the prospects of getting a raise?

Even if you’re not debating between two jobs, if you’ve been at a company long enough and have made a good number of impactful contributions during your service, you are in a good position to ask for a raise. Libby Leffler, the vice president of SoFi, suggests this: “Conduct market research on your current role and educate yourself about your company’s pay practices.”

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#5 Spend on yourself

Saving for your future is important, but so is keeping your sanity. While your essential living expenses should still remain at the top of your priorities, you should also remember to set aside money for your leisurely needs. It’s okay to treat yourself as long as you do it responsibly. A good way to plan for this is by looking at your expenses from month to month.

You should always pay off all your essentials first, then try to put aside some money into your savings. After that, whatever money is left over can be used at your leisure, or you can always put it into your savings as well. The important thing is that you ensure the first two things have been taken care of. Once you’ve zeroed your bills and added some funds to your savings, you should be okay to spend the rest on yourself!

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