When you are in your twenties, you are building a solid foundation for your financial future. The choices that you make now will affect you as you move into your thirties and beyond. You can take the steps now to build a solid future for yourself and your family (when you decide to have one). These steps will help to establish habits that will help you successfully manage your finances over the coming years. Following these steps make it possible for you to enjoy your twenties while still planning for your future.1

Stop Using Credit Cards

One of the biggest things you can do is to stop using your credit cards. It is too easy to get into credit card debt, and to find in a few years that you have managed to run up large amounts of debt. Take the time now to stop using your credit cards, even for emergencies. This will prevent you from having to dig out from under large amounts of debt when you get older. A budget, and an emergency fund will help you to accomplish this goal. 2

Start Saving for Retirement

You need to start saving for retirement now. The sooner you start, the sooner you will be able to retire. Additionally, your money will have longer to grow, which means you can will not need to contribute a larger percentage as you get older and you are trying to catch up with your retirement savings3

Create a Solid Financial Plan

You would never go on a trip without a solid destination in mind. It is important to have a solid financial plan so that you know where you are going to end up financially and to help you identify the steps you need to take to get there. Your financial plan should include everything from buying a home to retirement. As you get married and have children, you will need to adjust the plan. Do not put off creating a financial plan just because you are single. You still need to have specific savings and retirement goals that you are working toward. 4

Save for a Down Payment on a House

As soon as you have paid off your credit card debt, you should start putting money aside to use as a down payment on a home. It does not need to be very much money while you are paying off your student loans, but after you do, you should try save enough to buy your first home in your late twenties or early thirties. A down payment makes it easier to qualify for a good interest rate on your mortgage. Saving now will help you be ready when it does come time to buy a home.5

Establish an Emergency Fund

Your emergency fund will give you peace of mind. It can help you deal with the unexpected things that life throws at you from your car breaking down to home repairs to losing a job. The larger your emergency fund, the safer you can feel. After you are out of debt, try to put aside a year’s worth of expenses. You can put your emergency fund in a money market savings account that offers slightly higher interest rates.

Budget Every Single Month

The most important step you can take in your twenties is to begin budgeting. You will need to budget for every month for the rest of your life. The sooner you start budgeting the better off you will be financially. Your budget gives you the ability to decide how you want to spend your money. It helps you to track your spending and can prevent you from overspending or relying on your credit cards. Once you get married, you will need to budget with your spouse. It takes time and work, but if you are budgeting you can be confident that you are handling your finances responsibly. Every dollar should be assigned a category before the month begins, and when you run out of money in that category, you will need to stop spending. If you can master this step, you can win financially.