know how the saying, "Bad habits are hard to
break." But sometimes it’s even harder to create
good habits, especially good money habits.
1 in 3 millennials surveyed by Bank of America and USA
Today said their parents did not teach them good
financial habits at home. Similarly, only 19 states in
the U.S. require schools to offer personal finance
courses, according to the Council for Economic
rising student loan debt, millennials are struggling to
put money away for retirement — or at all. The key to
taking control of your finances, however, is to start
young. Here are five essential money habits you should
master by your 30s.
AND STICK TO A BUDGET
a budget, you can’t take control of your finances. A
proper budget tells you where you want your money to go
— not where you’ve already spent it, said financial
planner P.J. Walsh.
view budgeting like balancing a checkbook, simply
tracking where you spend your money. Rather, your budget
should tell you how much money is going toward mandatory
expenses — rent and student loan payments — and how
much you have left over to save or spend.
mobile apps like Mint and Mvelopes make it easy to track
your income and expenses, develop a budget, and stick to
it. But while setting up a Mint account might be easy,
keeping tabs on your budget and making adjustments to it
every month takes discipline. "A budget is not a
‘set it and forget it’ process," Walsh said.
BELOW YOUR MEANS
than 20 percent of millennials spend more than they
earn, according to the FINRA Investor Education
Foundation. Even if you’re scraping by paycheck to
paycheck, you’re still falling behind on retirement
savings. To truly get ahead financially, you have to
live below your means so you can build wealth and reach
live below your means, you’ll need to make sacrifices
— like skimping out on daily Starbucks runs and
cutting down on weekend drinking. Reconsider where you
eat and how much you’re spending each meal. Small
purchases can add up.
for instance, you work a typical 40-hour work week and
eat out at lunch with co-workers every day. If you’re
spending $7 per meal, in one month you’ll have spent
$140. Over the course of a calendar year, you’ll have
spent $1,680 — and that amount doesn’t include the
cost of breakfast, dinner and weekend brunches.
millennials aren’t doing a good job of managing credit
wisely. They’re more likely than other generations to
be engaged in costly credit card behaviors — like
carrying a balance, making minimum monthly payments and
paying late fees — according to the FINRA Investor
why are these behaviors so costly? If you’re maxing
out credit cards and paying bills late, you’re hurting
your credit score. And a bad score can affect your
ability to get more credit and forces you to pay higher
can boost your credit score and improve your credit
history by keeping balances low and avoiding opening too
many credit accounts at once. If you need to use your
credit card to afford a purchase, chances are you
shouldn’t be making the purchase.
AN EMERGENCY FUND
33 percent of millennials have an emergency fund,
according to the FINRA Investor Education Foundation.
When you’ve only recently graduated or started working
full time, finding room in your budget for a rainy day
fund might seem impossible. But Walsh said contributing
to an emergency fund should be treated as a mandatory
expense — not a luxury.
an emergency fund, you’ll likely have to rely on
credit cards to cover a car repair, a trip to the
emergency room and other unexpected expenses. If money
is tight, start saving in small ways.
up small, automatic deposits from your checking to your
savings account. Even saving $25 every two weeks can
save you $650 over the course of a year. If you receive
a bonus, immediately put a portion of that money into
savings. If you made plans for brunch but cancelled last
minute, transfer the money you would have spent into
your savings — after all, if you could afford brunch,
you can afford to put the money away.
percent of millennials said they are actively saving for
retirement, according to Bank of America and USA Today.
While saving for retirement might not seem like a
priority in the face of student loans, the sooner you
start saving for retirement, the more quickly you can
build up savings — that’s the power of compound
advantage of compound interest as soon as you can can
give you tens of thousands to hundreds of thousands more
in retirement," said Erin Lowry of Broke
Millennial. If, for example, you contribute $100 every
month in a retirement account and earn 8 percent back on
your investment year over year, you’ll have more than
$135,000 in savings in 30 years. Delay your savings by
ten years, however, and you’ll have just over $55,000.