Your 20s are the time to hang out, explore the world, and learn from mistakes. Making smart financial choices early on will set you up for long-term success—making your 30s even sweeter. Avoid missing payments, racking up debt, and living beyond your means to have a more peaceful future. Here are four essential finance habits to start in your 20s.

Improve Your Credit Score

The most important thing you can do in your 20s is build a solid foundation for your future. By building your credit score and aiming for the 700+ club, you will find that making bigger purchases is a lot easier. When you have a good credit score, lenders are more confident that you’ll return their money. Thus, you will receive better credit card opportunities and lower down payments.

Pay Off Your Debts ASAP

If you have a credit card or took out a student loan, paying back your debts should be one of your main priorities. You should treat your credit balance like a utility bill or rent—it’s just as important. Owing money to a lender can carry consequences, such as having the potential to lower your credit score if you miss a payment. Some lenders may consider you a high-risk borrower, making it difficult to qualify for bigger purchases, such as buying a car or a home.

Begin Retirement Planning

Where do you see yourself in 40 years? On the beach? Out of the country? Retirement seems so far away when you’re in your 20s, but it doesn’t hurt to think about the future. The earlier you start saving toward retirement, the more your money will appreciate over time. No matter how small your contributions may seem, you will thank yourself for the foundation you built. Your retirement savings account should align with what you’re financially comfortable with.

Start Healthy Budgeting Habits

The most essential and effective personal finance habit to start is to develop healthy spending habits. Creating a budget is one of the effective ways to survive your 20s. Not living beyond your means but balancing responsibility and fun is key. You can slice your budget in many ways, but handle your essentials first. After addressing all your responsibilities, you can make room for time to treat yourself.

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