5 financial tips for 20-somethings to help avoid bankruptcy

It’s never too early to start good financial habits. Most 20-somethings pay no attention to their spending habits, which can often lead to less savings and more debt.

Don’t wait too long to control your spending and save for retirement. If you start early and follow these 5 financial tips, you’ll be able to save more and make better financial decisions.

1. Don’t spend more than you earn

Make sure you pay attention to how much you earn, and spend less than that amount every month. Once you fall into the habit of spending as much as you make, you’ll find that you’re living paycheck to paycheck with no savings. Ideally, you should be saving between 3-10% of each paycheck.

2. Make saving money a habit

It’s all too easy to spend all the money you make. Even if you’re only saving a few dollars per paycheck, locking in the habit of saving is what’s important. Make saving a part of your monthly budget, so the money you’re saving isn’t an option to spend.

3. Avoid debt

It’s easier said than done – but the most important thing a 20-something can learn is to avoid debt altogether. Pay down any debt you’ve got as quickly as possible so you can save more money. The sooner you’re able to put money into long term investments, they more they’ll pay off in the future.

4. Keep an emergency fund

If you’re single, your emergency savings should cover three months of your standard expenses. If you’re married, you should put aside six times your monthly expenses. Don’t touch this money unless you absolutely need it because something catastrophic happens. Should you need to use the emergency funds, it could be the only thing that saves you from incurring huge debt.

5. Continue to evaluate your budget

Pay attention to what you’re spending. If you spend $5 a day on coffee, that’s $25 a week and $1,300 a year. Drinking coffee from home or the office could result in significant savings. Take a hard look at other spending habits – lunch, after dinner drinks, dinners at restaurants. If you minimize your non-essential expenses, you’ll have more money to save and invest for your future.