The Best Money Habits To Start As A Young Adult

Saturday, August 28, 2021

 Everyone develops money habits, but some are better than others. We live in a time where it's increasingly harder to move out early and save for the future. With so many opportunities, sometimes we want to save for different experiences, rather than a house. Habits can be hard to break and shape, but it's easier to form better habits the younger you are. Your young adult years are some of your most life-shaping, so here are some money habits to develop in this time. These money habits will help you achieve financial freedom and afford the things you want. 

Developing Good Money Habits

As a young adult, there are a lot of expenses coming up. Whether you want a new car, house or child, you're going to have to save up. Most people won't move out until 28 or older. Others won't have kids until 30. That is a lot of time from 18 to 30 to start saving money and developing money habits that benefit you. Developing good money habits as early as possible makes it easier to implement them later down the line. It's important to understand your finances and have systems in place for any scenario.

Everyone has their own habits and opinions on money. Just because you want to spend rather than save doesn't mean it's wrong. If you want to save and move out as soon as you hit 20, that's great. But if you'd rather rent and enjoy more experiences, that's okay too. These habits are a guide to what you could do and habits that have so far given me the best opportunities. 

Start Saving Early

Saving money as soon as you start earning can be one of the best things you do for your finances. You don't have to save a lot of money as every little bit helps. Everyone is different when it comes to saving money, and some find it more difficult than others. It might be worth opening a limited access savings account. It means you'll have a higher interest rate but can only access the account a certain number of times a year. If you set up a monthly direct debit into that account, you'll be more inclined to keep it there. You also don't spend it as soon as you receive it. 

I started saving money as soon as I got a job. At 14, I saved most of my paper round money, which allowed me to purchase a car as soon as I turned 17. While I was lucky to get a job that early, it is worth saving as early as you can. Even if you put away £25 each month, you're still contributing to your savings, and it will build up over time. The earlier you put away money, the better. If you saved £100 a month from the age of 18, that means you'll have £14,400 plus interest by the time you turn 30!

Create A Budget

As a young adult, you want to make sure you know where your money is going. If you get into the habit of budgeting every month, you may find that you end up with more money at the end of the month. To create a budget, you'll need to know your income, monthly expenses and irregular expenses you'll be making in that month. The irregular expenses are things like trips out or birthdays, while the monthly ones include food and bills. 

Once you have a budget made, you'll have a figure that will be the money you have leftover. If you can, put it into a savings account. If you have accounted for savings in your budget, you can either top up savings or invest in yourself. Budgets also allow you to look at where your money is being spent and find ways to cut down on expenses. If you're spending a lot on subscriptions, you can cancel them. If you spend a lot on food, see where you can change your menu plan! 

Create An Emergency Fund

The pandemic has taught me that money isn't secure, and things can change in an instant. I was lucky enough to still work over lockdown, but I know many have lost jobs or had a reduced wage. Having an emergency fund can benefit anyone, but it's best to start putting it away as a young adult. For my emergency fund, I put £1000 into a high-interest savings account with limited access. It means that I can't withdraw the money often, but it's earning a lot of interest. When I make some unexpected money or have a bit extra from my budget, I top up the account.

It's good to consider an emergency fund. It doesn't need to be a lot of money, but it's worth looking at your monthly expenses to work out what you'd need to put away. Some people like to save 2-3 months worth of rent, utilities and food as their emergency money. Others will put money aside if the car broke down or for unexpected payments. Whichever you decide to do, make sure you put it into a limited access account. The interest is usually higher, and it will prevent you from dipping into the fund. 

Regularly Review Your Finances

On payday, you should check your financial position. It's the time to transfer money to savings accounts and pay off any debts you may have. Throughout the month, you should keep checking your finances. Unexpected payments can happen all of the time, so it's a good habit to understand what position you are in before you need to pay out. You don't need to check your balance every day, but it's worth looking at your bank and budget every week. You can adjust your budget for anything extra that you've purchased, so you have a clearer idea of how much money you'll have at the end of the month! 

Build A Good Credit Score

I have a good credit score and started building it as early as possible. Credit scores can be hard to wrap your head around. There are lots of influencing factors, including loans, account age and fast repayments. Building a good credit score takes time, but it's helpful to start building as soon as you can. Credit scores help you to apply for car loans and mortgages, so they are valuable when you're looking to purchase expensive things. Here are some easy ways to build a good credit score as a young adult:

  • Pay your bills on time and put bills in your name
  • Pay by direct debit where possible
  • Avoid spending over 50% of your credit facility
  • Avoid going into an overdraft
  • Make sure you're registered to vote (It proves your residency and your identity, showing stability and rules out fraud)
  • Keep an account open for a while (Aged accounts improve your score)

Set Yourself Financial Goals

Every week, I set a list of things I need to do that week. If you plan out your week's to-do list, why are you not setting financial goals? Every month, you should set money goals for yourself. Whether you want to save money, make money or invest in something, write it down! Setting money goals helps you to form better habits. For example, writing down that you want to save money can help you cut down on spending. It's a phycological trick. If it's written down, you almost feel like you need to stick to it. Setting financial goals is a habit you should consider starting as it helps you work with your finances and be more accountable. It's also fun to tick goals as you go along and watch your money and investments improve! If you're looking for more information on goals setting and manifesting financials goals, I have a whole post about it!

Have Multiple Sources Of Income

The lockdowns have taught me that no job is stable and that financial situations can quickly turn. Having multiple income sources is one of the best money habits I have learnt recently. There are so many benefits to investing your time in another source of income. You don't need to be making a lot from another hustle or job, but having a little extra can't hurt. Having another flow of money, even just £50 a month, can help you to afford the things you want and need. Anything I make on side hustles, I keep and treat myself. My work salary goes towards rent and bills. That way, I'm motivated to work on my hustles, even just for a few hours a week. Here are some blog posts I've written on making extra money!
I have multiple savings accounts. Each one is for a different thing, but it helps me to keep everything separate. My current account is for main expenses and bills. I also have emergency funds, a help-to-buy ISA, a general savings account and a car fund. Creating different bank or savings accounts to sort out your finances is a great habit to start. It keeps you from spending money that you're trying to save. It also lets you see where you're at with your savings accounts, so you know how much more you need. Some will allow you to have a money tracker at the top of the mobile banking app, so you can see what you need to save every month and how far you are from the target.

Reinvest Your Money Wisely

I recently had to repay for my blog's domain. It made me think about where my money goes and how I invest in myself. To me, my blog is a good investment. I make enough money from it to repay blogging expenses and still make a little profit. When you purchase something, think about what benefit it has to you. In a way, you're reinvesting your money. Some things won't help you make money in return, but others may later down the line. Think about what you're spending your money on and how the reinvestment is a benefit to you. If you purchase a course that you aren't willing to put in the hours for, is it a worthy investment? Reinvesting your money is a good habit to get into at a young age, but make sure you consider what you're reinvesting in!

Money is something you need to think about, no matter what age you are. Building habits can be hard, but the sooner you start, the easier it is. Unfortunately, many young adults will have to work harder and smarter with money to afford things like houses. Forming good habits can help you to meet your goals faster. What are your favourite money habits, and what have you done to be smarter with your money? I'd love to hear what you're doing to improve your finances! 

You Might Also Like


  1. Great tips :- ) I like to have my savings completely liquid but having an emergency account in another bank is definitely a good idea. My main bank offers different "envelopes" aka sections of the savings account, which is also a great feature to differentiate between several savings goals :- )


  2. YESS to all of these! I was taught budgeting at a really young age. My mum and nan were on it when it came to holiday spending money and they gave us a lot of responsibility for looking after our own little money bags. It taught me a lot.


  3. Thanks for sharing, these are great tips to start saving up :)

    Nic | Nic's Adventures & Bakes

  4. I used store cards to build up my credit score, I only buy what I can afford anyway. I don't think I've ever nudged into my overdraft since I opened my first bank account although I have been close between jobs.
    On payday I automatically transfer a portion out into savings, and I always have. It's been such a help when emergencies pop up.
    Cora |

  5. I started saving money in my early twenties and it's something I definitely do not regret and I would recommend anyone to start saving as early as possible! x

    Lucy |

  6. Fantastic tips. I learned about money far too late. When I was young and in my teens especially, I wish I had had a more sensible view of money because I'd be in a much better position now if I was, instead of spending it all on wine and TopShop!x

  7. Great post! I feel like there is not enough mention of good money habits. I am extremely lucky that I am good with money and I have been saving for a long while. However I just have the one account and I really should think about a savings account! Thanks for this x

  8. These are all great tips! I was honestly better at saving before i left home and used to be more mindful of it, now it's a bit trickier. As you said though, learning about finances and saving money as soon as possible is the best way to start!

  9. These are some great tips. A budget is essential, and so is an emergency fund. I'm working on establishing another source of income, but I'm not quite there yet. Financials can be so hard to manage if I don't stay on top of things.

  10. So many brilliant tips! It's really important to have finance goals and have emergency money so you always have money to fall back on too xx

  11. I really need to start an emergency fund, this is one thing I've always been really bad at is having savings. Thank you for sharing x

  12. Great post, Emily! I just finished paying all my debt from uni and I'm so happy to be able to focus on saving now! These are all lovely tips and I always pre-plan where my pay goes xx

    Lynn |

  13. I do wish I started early with developing good money habits. Anyhow, at least I'm now on the path towards building better money habits. Better late than never.

  14. This is such a great post that every young adult needs to read! We all need to understand the value of money and the importance of saving and having an emergency fund! Really loved this post! Drop me an email if you ever want to write a post for Grown Ups Club as this is the kind of content we produce :)

    Katy | |

  15. Wish I had these tips in my early 20s! If I could go back in time, I would've loooved to actively save and let compound interest do its thing. I also second building an emergency fund and constantly reviewing your expenses and accounts. I remember I used to be so afraid of checking my balance and always thought I had more than I did (which I did not, haha).

    It's never too late start building better financial habits! These are all great tips and thank you for sharing them!