As time goes on, financial habits solidified in your early 20s will have a tremendous impact on your credit score and savings balance in your 30s, 40s, and beyond. Plagued by student loans, mortgages or other large financial commitments, people can understably be deterred from thinking about their long-term financial future. If you’re prepared to think ahead and build a solid financial foundation despite the apparent complexities, take into account these three unconventional money moves that you can make right now that will accelerate and strengthen positive money saving habits.
Planning for Retirement
One of the most unconventional money moves you can make while young is planning for your retirement. Swept up in tuition payments and other forms of debt, it may just seem a bit too foresighted to consider saving money for forty or fifty years in the future. Nevertheless, planning for retirement is not all about allotting a portion of your funds to an untouchable account or utilizing money you don’t have. Though it’s often overlooked, the most important element of planning for retirement is deciding what, exactly, your ideal retirement looks like.
Do you envision your retirement spent on the sunny beaches of Florida, soaking up the sunshine and retreating to your air-conditioned condo? Or does your it entail more movement — travelling and exploring your favorite cities and countries? Many people save without actually having a concrete vision of their retirement in mind. Of course, plans change and it’s important to be prepared, but a general outline of how you’d like your retirement to play out is essential. Not only will it inspire you to save for something that seems more tangible, it will also leave you with a general notion of how much to save and how often you need to in order to achieve your financial goal.
Tracking and Budgeting
If you don’t have a concrete understanding of where your money is going each month, it’s quite easy to slip into the habit of living paycheck to paycheck. Tracking your income, expenses, and personal spending can leave you with an idea of where your money is being wasted and where it should be spent instead — leading ultimately to great money saving habits. There are several apps to help you keep track of your finances, making it easier to navigate days of thoughtless splurging (ie: brunch with friends followed by shopping and two trips to Starbucks).
Once you’ve tracked your monthly allocation of funds and can see how much you actually waste on pints at the bar or trips to the mall, budgeting becomes much more feasible. After setting aside bills, loan payments, and all other monthly expenses, you should have a small surplus. Now is the time to set priorities:
- How much do you want to save for retirement?
- How much do you want to save for unexpected costs like car repairs or trips to the doctor?
- If there are certain activities you enjoy doing, such as travelling, how much should you allocate to those?
- What about personal spending? How much do you value having a monthly buffer for spontaneous spending?
- Are you saving for any other big investment, such as a house or a new car?
Once you’ve established your priorities, you’ll be able to see what you have to sacrifice in order to make intelligent financial decisions.
An especially unconventional money move for students or recent graduates, refusing a monetary safety net from family, a significant other, or other benefactors in exchange for financial independence can daunting. However, establishing positive money saving habits is only possible while in the midst of supporting yourself; making long-term financial calculations suddenly becomes important and real once you’re directly dealing with your own future.
However tempting it is to accept the financial support of others — especially when the concept of a stable and significant income is laughable — it is much more empowering to experience supporting yourself. Saving for emergencies becomes vastly more important, and gradually these money saving habits will lead to peace of mind when it comes to knowing you’ve taken the proper steps to ensure your present and future is secure.
Wondering Where to Start?
Although you may not be making vast amounts of money right now, learning to save, budget, and spend in moderation while you’re young will lead to the development of great financial habits. With nothing to lose and everything to gain, these unconventional money moves may just provide you with a real sense a financial security. Even by thinking of your long-term financial future you’re providing yourself with a great start. You can also seek help from your bank; they can assist you in establishing a savings plan and determining what investments are right for you.