Practicing Healthy Habits As A Young Adult


university students on a work placement .Making the transformation from being a carefree young person to a financially healthy adult can seem overwhelming and scary.  Most young adults starting out their careers can attest to the challenges of managing an entry-level salary while still striving for the financial stability they desire. But there are ways to create a path to financial independence early in your career.

Though your salary may be minimal now it’s vital to implement a realistic plan designed to save, budget, and maximize your cash flow.  If you find yourself in need of help reaching your financial independence, consider implementing these habits.

Write down what you spend:                                              

Budgeting is the foundation of personal finances at any stage of your life, not just for those starting to “adult”.  So if you’re new to budgeting, the first step is to write down all of what you spend: it could be the coffee you get each morning, the sofa you purchased for your apartment or house, or the monthly charge for the streaming video service you use.

The idea behind a budget is not to limit what you do with your money, but more importantly to maximize the money you work hard for each and every day.   It is a huge eye opener when you start to add up everything. It also becomes clear where you are wasting money and could cut back.  Cutting out even small things, such as that coffee or a pop purchase each day could save you over $100 per month.

Best of all, technology has made it easier to connect you with your finances and spending habits from the comforts of your own mobile phone or tablet. There are a variety of free budgeting apps available to you that will basically do all the tracking of your spending so it’s there each and every day to review as needed.

Create clear financial boundaries:

Ignoring the “Joneses” can be one of the biggest battles when making practical decisions regarding your finances.  You will soon realize that spending outside of what your budget can handle could push you further away from saving money and much further into debt.  “Can I do without this?” is one of the questions you should be asking when making a sizable purchase such as a new automobile, or buying/renting in the new trendy neighborhood. For example, it may be a difficult decision to stick with a used car that is already paid off instead of buying a brand new vehicle after college – but it was a smart one.

One thing you could consider is the “50-20-30 rule.”  Experts state that we should spend 50% of our monthly income on necessities, which would include utilities, food, and rent.   The next 20% would be allotted to savings and debt, such as paying off any loans or student debt.  The last 30% of your income would be for personal purchases, things like your mobile phone plan, internet/cable/streaming services, etc.  Staying within these guidelines can set forth financial boundaries that will cultivate a healthy financial future.  Forget the noise of the Joneses and stay within your means.  Eventually, you’ll build up your finances and leave others in your financial dust.

Paying yourself is priority #1:

When it comes to managing your finances and becoming more independent, you have permission to be a bit selfish.  To clarify, prioritizing paying yourself above and before you pay anything else is highly important when it comes to having a successful financial future.  No one can avoid unexpected expenses or financial emergencies, but like a Boy/Girl Scout, you should “be prepared.”

Having a savings plan will also keep you from accumulating debt with credit cards and loans.  It will help you learn to live and be content on a smaller budget.  A suggestion would be to start putting a small amount into your savings each month.  Maybe you can’t do 10% of your paycheck, but even 5% is better than nothing and it provides you with the opportunity to make saving a financial habit.

Many employers have made it easier for their employees to streamline their savings by offering direct deposit options, where a portion of your paycheck is put into your savings or a money market account each time you get paid.  You can also set up a process to transfer from a core bank account to a long-term savings or investment account so your financial future is automatically being handled.

Keep in mind that as you achieve your savings goals, you can increase the amount based on what you can afford.  It’s also smart to contribute as much as you can to your employer’s 403b or 401k retirement savings plan.  This money can be taken out of your check even before you get paid so it’s likely that you won’t even miss it. You will likely experience long-term tax benefits as well.

Information courtesy of GreenPath financial wellness.

Need additional help? 

We offer our members access to money management and financial education services through GreenPath Financial Wellness.  As a member, you can receive assistance with:

  • Personal and family budgeting
  • Understanding your personal credit report and how to improve your score
  • Personal money management
  • Debt repayment
  • Avoiding bankruptcy, foreclosure, and repossession

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