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My early twenties, especially my college years, were financially stressful like a lot of people’s are. I survived on scholarships, financial aid, part-time work, and a cheap student lifestyle. My first post-college job didn’t pay spectacularly, but those first years out on my own as an actual adult were absolutely essential in building the foundation for financial habits that would make me good with money by the time I was 30.
1. Ask for and keep track of your receipts
I got a good scare in my early twenties the first time I nearly overdrafted because I’d forgotten to keep track of my receipts. I hadn’t entered a few purchases into my financial tracking program and the purchases hadn’t shown up in my bank account right away, so I thought I had more money on hand than I actually did. Luckily, I had set up my bank account to send me emails whenever my account went under $20, so I didn’t actually overdraft, but the potential fees from any additional purchases could have sunk me fast.
A few more scares like that pushed me to develop the habit of asking for and keeping track of my receipts. Whether the receipts are digital or paper, I make sure to record them within twenty-four hours so that the amount of money I think I have is accurate. I also check my bank accounts once a week to make sure that I haven’t accidentally recorded anything incorrectly — there’s a big difference between a $15 purchase and a $51 purchase.
2. Create a place to put your paperwork
When I went to college, I moved over 800 miles away from my family. I couldn’t pass important financial documentation over to my parents to add to their filing cabinet for safekeeping — I had to keep track of it all on top of moving roughly every nine months. I’ll be honest, my first attempt at a filing system was literally just a banker’s box. Anything that was important went into that box, and I could pull the box out from under my bed to dig through it if I needed anything.
My filing skills leveled up through my twenties. I’m still not great, but I can pull out folders with all my tax documentation for the last decade should the IRS ever ask for it, I have records of all my post-college employment, and I can prove continuous insurance coverage for my car. Having these records easily accessible has helped me with everything from filing my taxes on time to applying for student aid to eventually getting a mortgage in my thirties.
3. Play with practice budgets
When I got bored in my college classes, I pretended to take notes by writing down my budget. I calculated how many hours I would work that month and what my net pay would be. Once I had an estimate of my income, I’d start subtracting my spending and savings to make sure that everything was on track. When that got boring, I started forecasting.
What if I got a better-paying job? Moved to an apartment with three roommates instead of five? I’d start doing mock budgets for a bunch of different scenarios just to see what was and wasn’t possible and what I could do to make something currently out of reach a possibility in the future. These practice budgets also helped me figure out how to plan for emergencies and long-term goals.
I still do these practice budgets. I’ve been fortunate enough to work at a company that holds annual performance and compensation reviews based on your hire date. In the month leading up to my annual review, I start running budgets. If I get a 3% raise, what does that translate to in take-home pay? What do I want to put that extra money toward? If I get 4% or even 5%, what else can I do? And this year, what if the pandemic means that I don’t get a raise or even have to take a pay cut?
That way, no matter the news I get during my review, I will have a plan that I can implement immediately. Too much money slipped through my fingers when I was younger simply because I didn’t know what I wanted to do with it before it was gone.
4. Look for deals on expected purchases ahead of time
The worst time to make a financial decision is when you don’t have enough time to think about it or need a replacement immediately. It took a couple years for me to learn that waiting to replace something until it broke or wore out wasn’t a great long-term strategy. Sure, it let me put off purchases when I was feeling extra cautious about my bank account, but I always seemed to pay more out of pocket when I was eventually forced to replace the item in question because there wasn’t much time to be strategic.
I eventually learned that things — electronics, work clothes, kitchen gadgets, etc. — have a shelf life, stores have regular, predictable sales, and I can actually time purchasing replacements to my advantage. If you have a pair of favorite pants for your work wardrobe, keep an eye out for sales/coupons so you can get a replacement pair cheaper and have it ready to go when the time comes. I definitely prefer to buy my work trousers for $38 instead of $60, and I can do that with some planning.
5. Keep searching for ways to learn
One of the best financial decisions I ever made was deciding to take a family finance class my last year of college. I knew I wasn’t terrible with money by that point as I’d kept myself afloat, but I also knew that there was a lot that I could still learn. That class taught me about compound interest, how to save for retirement, how to calculate loan payments, and a whole bunch of other real-world money topics.
The class also left me hungry for more, especially since it didn’t explore individual experiences and circumstances very much. I started reading books, searching for articles, and dipping my toes in the personal finance world online. I wanted to learn the real-world strategies other people used to take control of their finances to see if there was anything I could implement in my own life. The Financial Diet has been a great place for me to learn about finances from other millennial women, and I’m glad I’m here.
My early twenties were lean years, but those same years also gave me the opportunities I needed to start building habits that helped make me good with money in my thirties. What habits did you start in your early twenties that are helping you be good with money?
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