Four healthy financial habits you should learn while you’re young

Financial worries are the bane of many older people’s lives. From mortgage payments, retirement funds and healthcare costs, there are so many obligations making it difficult for older people to take control of their money.

It’s better to learn healthy financial habits while you’re young, before you have the stress of managing significant financial responsibilities.

So, which are the most important habits you should learn?

In this article, we’ll share four healthy financial habits you should learn while you’re young. 

1. Budgeting

It’s hard to accomplish anything without a plan, which is why everyone needs to get good at budgeting. This one foundational habit makes it easier for you to accomplish all your financial goals, from paying off debts to investing towards retirement. 

There are different ways you can set a budget, but they all start off the same way: by subtracting your typical regular outgoings from your monthly income. This lets you know how much disposable income you have each month. How you use this is up to you, but you should consider following proven and popular formulas such as the 50/30/20 rule.

2. Paying yourself first

If you leave it until the end of the month to put money towards your financial goals, you could easily find that you have nothing left. That’s why it’s smarter to ‘pay yourself’ as soon as your salary comes in. You already know how much money you want to put towards your goals thanks to your budget. All you need to do is build the discipline of putting it where it needs to go as soon as possible. The easiest way to do this is to automate these payments, so that you don’t have to remember to do it manually each month.

3. Clearing debt

Credit card debt is a burden you don’t want to carry. Because of compound interest, debts grow larger the longer you leave them unpaid. So, it’s best to train the habit of paying them off as soon as possible. 

Paying back debt early will help you keep your finances under control and lower your stress over the long term. But there are other important benefits this habit brings you, such as letting you access lower interest rates and helping you build a good credit score.

4. Saving for a rainy day

You never know what might happen. Unexpected difficulties can come at any time. And when they do, having an emergency fund to fall back on can help you cope. Ideally, this should be able to cover 3-6 months’ worth of your monthly outgoings. That way, you’ll still be able to fulfil your financial obligations should you be unable to work for a few months.

Having control over your finances can be complicated and stressful. But you have a huge opportunity to set yourself up for success while you’re young. Make the most of it by learning the healthy financial habits we’ve outlined above.