Financial management in early adulthood is challenging, but focusing on foundational money habits can change the game. Simplicity is the key to sustainable financial success.

This article covers 5 foundational money habits young adults must adopt for financial success. These habits lay a foundation for money management.

1. Tracking your daily expenditure

what gets tracked gets managed

Break Your Budget

Proper financial management begins with an awareness of spending habits. You must track how you spend your money. At the end of each day, write down every expense you have incurred, either digitally or on paper.

Although it may seem tedious, practicing this habit consistently will significantly improve your finances.

Here are the benefits of tracking your daily expenditure:

It lays the foundation for a budget.

A record of your daily expenditure depicts your monthly spending and can be used as a guide in creating a monthly spending plan.

It helps identify bad spending patterns.

Tracking will reveal whether you are spending too much on takeout or getting into consumer debt. When you know your bad spending habits you can implement change for financial success.

You work hard for your money, so it’s important to mind how you spend it.

2. Creating a monthly budget

A budget is a time-specific spending plan for an income. It is crucial to plan your spending to avoid falling into bad consumer habits and debt.

Start by outlining all of your monthly expenses, both essential and non-essential. Next, assess your financial circumstances and comfort level to determine the amount for each expense.

TIP: Use your record of daily expenditure to guide you in determining the amount to allocate to recurring expenses such as transportation and food.

Here are some key things to consider when setting a spending amount:

Adequacy

Be realistic about how much is needed to sustain you through a month. Set aside an adequate amount to avoid shortage mid-month. This is particularly important for expenses that vary from month to month but are essential, such as groceries and transportation.

Flexibility

Seasons change, and so do financial needs. You should adjust your spending allocation accordingly. For instance, you may have moved into your first apartment and need to purchase items. You will have to cut down on other expenses to prioritize buying furniture.

The overarching principle in creating a budget is keeping expenses below your monthly net income.

3. Tracking your financial progress monthly

Schedule time at the end of each month to analyze your finances. Assess your spending in comparison to your budget and financial goals. Pick the negative patterns and make changes accordingly. In the same light, note the improvements you have made. This will develop financial accountability and increase your chances of attaining your financial goals.

The key to successfully implementing this habit is making it enjoyable and something you look forward to. Always set a positive and fun mood before getting into it. Clean your space, grab your favorite drink, and play calm music in the background. Do as you please.

4. Practicing delayed gratification

As a young adult, it is easy to get trapped in the consumerism culture and overlook the concept of delayed gratification. You must counteract that mindset to avoid making poor financial decisions. When purchases are made in haste, regret is often inevitable. You may end up with a lower-quality item than anticipated or, worse, get into debt.

Before making any purchase;

Evaluate your need for the item.

Is it essential and urgent? If not, don’t buy it, or take time to re-evaluate.

Budget and plan for the purchase.

Compare prices, identify where to find the best quality, and the best time to purchase.

5. Living within your means

As a young adult, you must acknowledge your financial boundaries. This will help you make informed money decisions and avoid debt.

Stop living to impress others and quit buying stuff you cannot afford. Live within your means.

Communicating your financial boundaries to your friends and family is equally important. It creates a supportive environment for your money goals. If you cannot afford to eat out or go on a trip with friends because you are saving for something important, do not hesitate to let them know. There is no shame in being honest about your financial situation.

Conclusion

Money management can be simple and financial success is attainable. Focus on these foundational money habits and consistently apply them for lasting results.

Here is a resource to add insight into managing your money: