The beauty of being in your 20s is that your future is a blank slate. Life may change year to year, but your long-term goals can be in the abstract. At some point, sure, it would be great to own a home. Or spend a year travelling.
But to have a hope of getting there—or moving on anywhere that isn’t your parents’ basement—you’ll first need a solid financial foundation.
And that starts, well, now. While we can’t promise you’ll be a millionaire in your 40s, we can promise that every single one of these moves will make you more financially well-off than you would have been otherwise.
1. Don’t Ignore Your Finances
One of the most tempting things to do when you’re young and not totally confident with money is to ignore it as much as possible. With the help of autopay for your bills and accountants who handle your taxes, you can get by with doing little more than checking your bank account every so often to make sure you’re not too close to zero.
But when it comes to financial health, knowing all your important numbers—and regularly keeping an eye on them moving forward—is critical to long-term success.
What should you be looking at? Even if you don’t create a full-blown budget, knowing how much money is coming in and going out every month is an obvious basic to help you avoid overspending. You should also know the amount of debt you owe as well as how much you have in savings, investments, or retirement accounts. Your credit score is important when being considered for apartments, loans, and mortgages, but also consider other factors that lenders may look at before they decide to work with you. (Financial company SoFi, for example, doesn’t look at your FICO score but instead focuses on aspects of your financial health such as your career experience, your education, and how much you make versus how much you spend.)
It’s possible that, initially, you may not like the financial view. Maybe that student loan balance seems on par with Mount Everest, or you went a little crazy with the credit cards your first few years out of school. It’s not easy and not always fun, but trust me: Knowing where you stand is the first step toward finding yourself in a much more stable place down the road.
And the next step? Holding yourself accountable by keeping track of these numbers regularly. Whether you use a tool like Mint or a good old fashioned spreadsheet, put some time on your calendar every month to sit down with a glass of wine and review all your financial vitals.
2. Deal With Your Debt First
Before we can talk about spending your money smartly, we need to deal with the money you’ve already spent on someone else’s bill: a.k.a., your debt.
Student loans are a big one for many people early in their careers. And yes, they suck, but instead of moaning and groaning about them, look at them as a tool for building your financial worthiness. After all, they’re a debt, and paying them off on time every month makes you a stronger candidate for other types of loans. You can also look for ways to make the burden easier on yourself. If you’re suffering from student loan sticker shock, call your lender and see if you can change your monthly payment. Lenders have many payment options available—you just have to ask for them.
Another option is to refinance your student loans—meaning move your debt to an organization with more favorable rates—through a company such as SoFi. By lowering your interest rate in the long term, you can free up more cash for savings or day-to-day spending (SoFi members have saved an average of $18,936 over the course of paying off their loans.)
As for credit card debt, there are a few options. If any accounts are past due—more than 30 days—get those up-to-date stat. Most credit card companies are happy to work out manageable payment plans to get you back on track if you call them (and yes, call instead of email). If your accounts are current, at the very least make sure you are making minimum payments on all of them. Then, divide and conquer. A lot of people feel great about—and think it’s a wise move to—fully pay off smaller debts first before tackling larger ones. It makes more sense, though, to first pay down the debts with the highest interest rates. You’ll save a lot more money in the long term. Another great option if you have a lot of accounts open is to consolidate your credit card debt with a lower-interest personal loan, leaving you with only one payment to worry about every month.
3. Put Your Money in the Right Places
The most straightforward way to be rich by the time you’re 40 would be to pinch pennies as much as possible until then, cutting coupons, staying in on the weekends, and only buying what’s absolutely necessary.
But that doesn’t sound very fun—or frankly realistic. You should be able to enjoy your life now and later, and you can if you’re smart about where you spend and where you save.
In terms of day-to-day spending, you don’t have to cut out your coffee runs or start making your own clothes, but you can look for ways to spend more smartly without giving up the things you enjoy. Switching from cable to streaming services, for example, will get rid of a big monthly bill, while still letting you enjoy your favorite shows. Putting your gym membership on hold during warmer months—when you can just as easily exercise outside—can keep some extra money in your pocket. Buying used clothes instead of new, borrowing books from the library instead of buying, inviting your friends over for drinks instead of going out: There are so many ways to still live a great life while saving a little extra. (And when you really do want to treat yo self? Consider splurging on a trip or event rather than a new TV—science has shown that experiences make us happier than possessions.)
In terms of saving, you want to get your money working for you rather than just sitting there. This means you’re going to have to invest. I know this is easier said than done—and with so many options out there, it can be hard to know where to start. If you have good credit and savings, there are wealth management tools that can get you premium, but low-cost, services. Ellevest and WorthFM are great online tools for learning more, and SoFi will soon be launching wealth management tools with no management fees for members.
4. Invest in a Successful Career
Investing shouldn’t be limited to the stock market when it comes to your long-term financial health—you should make sure to invest in a successful career as well! Landing yourself on a career path that you love and that has plenty of growth opportunities (both personally and financially) will pay off in dividends for years to come.
What does this mean, exactly? First, make sure you’re on a career path that you’re likely to be happy with for the long haul, to avoid quitting your job on a whim down the road and putting yourself in a place of financial trouble. If you don’t enjoy what you’re doing currently, look for ways to explore other fields or consider talking to a coach to help you figure out your next move.
Whether or not you’re in a career you love, you should also look for ways to up your worth at work. Whether that’s asking for a raise at your current gig to up your earning potential down the line, signing up for an online class that will teach you a marketable new skill, or just taking on a stretch project that can position you for the next move up, investing the time and money into building yourself up will help you earn more and more in the future.
5. Surround Yourself With Financially Smart People
We’ve all heard the saying that you are an average of the five people you spend the most time with—and that goes for your financial status, too! A 2016 study in the Journal of Retailing and Consumer Services found that self-described financially disciplined college students were more likely to spend money when they spent time shopping or dining out with friends with more carefree spending habits. Yikes!
This doesn’t mean you have to ditch your spendy friends, but do be more mindful about your financial habits around them and look for low-cost things to do together. Then, make an effort to expand your circle and find people who share your professional and financial goals. There are lots of ways to do this, from meetups to Facebook groups to taking a class. SoFi has taken this idea to heart, offering dinner parties and happy hours to its members so people making smart financial decisions can meet others doing the same.
Finally, remember that your financial goals and challenges will keep changing, so make it a priority to continue learning about money. Mix some personal finance sites and blogs into your media diet, or even consider taking some classes to make you more financially savvy. It probably won’t be your favorite reading (though you never know!), but it will help keep your money front of mind and give you the tools to make decisions that will keep you financially happy for the long haul.