In your 20s you have a lot more concerns going on.  Usually you’re dealing with student loan debt, credit card debt and car payments.  You’re probably living paycheck to paycheck, stretching every penny as far as possible.  If you’re like me, then you probably miss the carefree days of being in college not worried about your financial future.

Developing your money management skills early can really give you a strong foundation for your financial future.  Here are my no fail money management tips to follow.

Create a budget:

You will see me talk about budgeting over and over, but it’s because it’s so important.  You need a budget, even when you’re just starting out and not making that much money.  It’s critical to see what comes in and what goes out of your bank account each month.  Many people don’t budget, but know they should.  So don’t be in that category.

In all honestly, no matter you age you should have a monthly budget.  If you need help starting one, read my quick 10 minute tutorial.  Need help deciding how much should be spent on each category?  Check out these figures I like to go by:

– 50% of your income should be spent on fixed expenses
– 25% on your financial goals – paying down debt, savings, retirement
– 25% should be spent on other expenses like eating out, travel, etc.

Open up a savings account:

People try to complicate savings way too much.  It’s really simple.  You should aim to put 10% of your after-tax income into a savings account each month.  If you’re able to do more then that’s great – do more.  If not, then stick to the most you can do.  I recommend aiming for a $1,000 emergency fund while trying to pay down debt.  It’s great to have an emergency fund to fall back on for those unexpected expenses.

I would recommend setting up an automatic contribution into your savings account each month.  It’s best to do it so you don’t even miss the money.  I think your payday is a great day.  If it comes out of your account before you even notice then you won’t make other plans for it.

Check your credit score:

As I’ve mentioned, right now is a great time to starting building your financial foundation.  Your credit score affects most everything you want to do in your financial life – credit cards, mortgages, car loans, etc.  Having a lower credit score can negatively affect the interest rate on any approved loans.  Monitoring your credit score is easy and it allows you to see what areas you need to improve.  You can use free services like Credit Karma to regularly check your score.

Create a debt payoff plan:

In your early 20s you might have gotten yourself into some debt.  Credit cards are basically thrown your way when you enter college.  Plus, school loans have become a huge part of the college life.  Create a plan to reduce your debt and start working towards it.  Being able to pay off your debt in your 20s will be a huge advantage when it’s time to buy your first home or your next car.  You’ll be able to qualify for better interest rates with having less debt on your credit report.  I like the debt snowball method where you pick your smallest bill to start with.  You pay as much as you can towards one debt while continuing to pay the minimum payment on others.  Once once debt is paid off you apply the unused payment towards the next smallest debt.

Setup monthly money dates:

I’m a firm believer in checking in with yourself.  By setting up a monthly money date you can review your budget.  If you need to make any changes or plan for any future expenses then the money date is the perfect opportunity.  Sit down during these dates and pay any bill that’s not setup on auto-draft, review and update your monthly budget, and plan out the next month.  Don’t let yourself get discouraged with money management.  Keep it fun by giving yourself time to plan for the future.