Your twenties are an exciting time of independence, discovery, and growth. It’s also the perfect time to build solid financial habits that can set you up for long-term success. The decisions you make now—whether it’s saving more or understanding investments—will shape your financial future. Don’t worry if finances feel overwhelming; starting small and staying consistent can make a huge difference. Here are 12 smart money habits you should adopt in your twenties to achieve security and freedom down the road.

1. Create and Stick to a Budget

A budget is the foundation of good financial health. Track your income and expenses, categorize your spending, and set limits for non-essentials like eating out or shopping. Plenty of apps like Mint or YNAB make budgeting easy and even fun.

Tip: Follow the 50/30/20 rule—spend 50% of your income on needs, 30% on wants, and save 20%.

2. Start Saving Early

Even small amounts add up over time. Open a savings account and dedicate a portion of your income, no matter how little, to savings. Automate the process so you don’t even have to think about it.

Tip: Aim to save at least three to six months’ worth of living expenses in an emergency fund.

3. Pay Yourself First

When you get your paycheck, prioritize your savings before anything else. By treating saving like a “bill,” you ensure that you’re consistently putting money toward your financial goals.

Tip: Set up an automatic transfer to your savings or investment account the day your paycheck hits.

4. Learn to Live Below Your Means

Just because you earn more doesn’t mean you should spend more. Practice living on less than you earn and avoid lifestyle inflation. This habit frees up money for saving and investing.

Tip: Look for areas to cut back, like meal prepping instead of dining out or buying secondhand instead of brand-new.

5. Build Your Credit Score

A good credit score can save you thousands over time with better loan rates. Pay your bills on time, keep credit card balances low, and avoid opening too many accounts at once.

Tip: Use a credit card for small purchases and pay it off in full each month to boost your score while avoiding debt.

6. Start Investing

It’s never too early to start investing. Thanks to compound interest, even small contributions to a retirement or brokerage account can grow significantly over time.

Tip: If your employer offers a 401(k) match, contribute enough to get the full match—it’s free money! For beginners, apps like Acorns or Robinhood make investing accessible.

7. Avoid High-Interest Debt

Credit card debt and payday loans come with crushing interest rates that can trap you in a cycle of debt. Avoid using credit cards for things you can’t afford and focus on paying off balances quickly.

Tip: Make it a rule to pay off your card in full every month. If you’re already in debt, use strategies like the avalanche or snowball method to eliminate it.

8. Grow Your Financial Knowledge

Understanding personal finance is key to making confident, informed decisions. Read books, follow financial blogs, or listen to podcasts to learn about saving, investing, and managing your money.

Tip: Start with simple resources like “Rich Dad Poor Dad” by Robert Kiyosaki or the podcast “How to Money.”

9. Set Financial Goals

Having specific, measurable goals keeps you motivated. Whether it’s a vacation, paying off your student loans, or saving for a house, knowing what you’re working toward gives your financial habits purpose.

Tip: Break big goals into smaller milestones. For example, if you want to save $5,000, aim for $100 a week instead.

10. Track Your Net Worth

Your net worth is the snapshot of your financial situation—it’s your assets minus your liabilities. Tracking it monthly or quarterly helps you measure progress and pinpoint areas for improvement.

Tip: Use tools like Personal Capital or a simple spreadsheet to monitor your net worth.

11. Learn to Say No to Impulse Spending

It’s easy to overspend when you’re trying to keep up with trends or friends, but those impulse buys can derail your budget. Develop self-control to make mindful purchases.

Tip: If you’re tempted to buy something unnecessary, wait 48 hours. Chances are, the urge will pass.

12. Build Multiple Income Streams

Relying on a single paycheck can be risky. Explore side hustles, freelancing, or passive income opportunities to diversify your earnings and increase your financial security.

Tip: Start with something simple like selling a skill on a platform like Fiverr or exploring dividend-paying stocks.

Start Small, Dream Big

Building wealth in your twenties doesn’t happen overnight, but developing these habits early can lead to financial freedom later in life. Even small, consistent efforts—like saving $50 a month or cutting back on one subscription—can make a world of difference over time. Remember, your twenties are your opportunity to set the stage for a stable, prosperous future. The sooner you start, the farther ahead you’ll be. Why not take the first step today?