Budgeting Tips for Your 20s

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So, you finally have financial independence. You can spend your money on the things you want, that’s exciting! However, budgeting doesn’t come naturally to everyone. And even if it does, budgeting for life can get pretty tricky once the bills start stacking up. Here are some tips and tricks from Debt Relief Canada on how to budget in your 20s.

Like making an investment, budgeting in your 20s is all about getting started early and establishing good habits early on. The more years you get under your belt of spending less than you earn (and saving), the richer you will be—in more ways than one! It will also help shape how much credit card debt vs student loan debt vs car loan debt you accrue.

As of January 2019, the average student loan debt is $28,950 and credit card debt is $16,748 per individual . The median salary for workers ages 25 to 34 in 2018 was $50,326 , so living on that budget of course may be a tall order. But budgeting in your 20s is never too early to get started, and budgeting can help you establish long-term financial stability. Here’s how:

1. Look at what you already have 

Pay yourself first, even if it’s just $5. How? Automate your savings account to transfer some money into investment accounts automatically every month. It might sound like not enough at first—until one day you realize how much you’ve saved.

2. Track your spending 

Don’t budget what you make; budget how you spend it . Keep track of everything, down to the last penny, every time you get a paycheck. It will take some time (and discipline), but once you can see all of your expenses in one place, budgeting gets easy. And like the saying goes, “If you can’t measure it, you can’t manage it.”

3. Save for emergencies 

You don’t want to be scrambling to figure out where next month’s rent money is coming from if an emergency arises—that’s not budgeting! An emergency fund should contain at least six months’ worth of living expenses . To budget, ensure you’ve got three to six months’ worth of emergency savings in an account that you don’t touch unless it’s dire.

4. Plan for the future 

Just because you’re budgeting in your 20s doesn’t mean budgeting is just about your day-to-day spending. Saving for retirement or your first home can seem daunting, but budgeting will make it a little easier by showing you what money is going where and how much more it takes each month to reach those goals. Thinking through some basics ahead of time—how much you want your down payment to be, when do you want to retire, etc.—will help guide budgeting decisions later on.

5. Don’t budget alone 

Financial apps like Mint can help you budget easily, budget effectively, and budget in real time so you can stay on target for your goals . Mint will also aggregate all your financial accounts into one place so it’s easy to see where you’ve spent money, how much debt you owe, and how much money is automatically diverted into savings.

Congratulations on your newfound financial independence! Just because you can now spend your money on the things you want doesn’t mean you should. Like making an investment, budgeting in your 20s is all about getting started early and establishing good habits early on. These tips and tricks will help make budgeting easier so that you can save for what’s important to you down the road and achieve the goals associated with a well managed budget.