From Skint To Minted: How To Nail Your Finances From A Young Age

When it comes to finances, the earlier you start, the better. Unfortunately, nobody teaches you that in school and most people wind up in a panic aged forty, wondering why they still don’t have anything. 

However, if you’re still young, that doesn’t need to be you. Saving just a little bit of money today can have an out-sized impact in thirty years’ time. 

So what do you need to do to nail your finances from an early age? Let’s take a look. 

Track Your Income And Expenses

When you’re trying to make things happen in your life, like buying a house or paying for your spouse’s immigration costs, tracking monthly expenses doesn’t make a lot of sense. You just have to get the job done. 

However, when you’re humming along and settled, then you’ll want to watch where you’re spending money carefully. There are all sorts of money sinks out there. 

Start by tracking your income and expenses for at least a month. You can use a spreadsheet, an app, a notebook, or whatever works for you. Just make sure you record every penny that you earn and spend. Then you can take a look and see where you’re making good decisions, and where you might be wasting money. 

Set A Realistic Budget

The next step is to set a realistic budget. You want to figure out how much you can save to invest. Many student checking accounts offer features that quickly separate your expenses into categories for better analysis.

A good rule of thumb is to follow the 50/30/20 rule: spend 50% of your disposable income on needs, 30% on wants, and 20% on savings. If you can keep that ratio going long-term, you’ll wind up with a substantial lump of capital you dedicate to whatever you want when you get older. 

Ultimately, though, you need a balance between savings and expenditure that works for you. You can’t deprive yourself long-term, so always choose a balance or adjust your expectations. 

Pay Yourself First

Another way to save money is to pay yourself first. This means that before you spend any money on anything else, you set aside a portion of your income for your savings. This approach is psychologically helpful because it lets you save consistently every month while also feeling like your work is rewarding you. 

The amount that you pay yourself first depends on your goals and circumstances. Ideally, you should aim to save at least 10% of your income every month. But if that’s too hard for you right now, start with whatever amount you can afford. Even small amounts early in life can have a dramatic effect on your net worth and financial security later. 

Build Your Emergency Fund

Last but not least, you’ll want to build your emergency fund. This stash is what you’ll use when something goes wrong (like when your car breaks down). Having this cash on hand provides tremendous security and lets you make the most financially-savvy decisions in a timely manner.