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Life as a young adult is full of new milestones. First, you graduate from college. Then you score your first job. Next, you might want to start a family or become an entrepreneur. These achievements are important.

But what’s even more important is making smart financial decisions. Getting your finances in order is the secret to becoming successful in the long term. Here are five smart money habits you should make to become financially independent.

Create a Budget

Budgeting allows you to track your income and know how to spend it efficiently. Although it might sound tedious to create a budget, it’s something you can draft on a weekend afternoon.

The best part about it is that you don’t have to create your budget manually. You can use budgeting apps to set aside money for bills, clearing debts, investments, and emergencies.

Budgeting tools can also help you budget for specific goals like buying a house, funding a new business, or a holiday trip. That said, a budget is useful only if you can stick to it. You can adjust your budget depending on your income and goals. But develop a habit of following it.

Adopt Smart Buying Habits

Smart buying means spending your money on products you need in a way that can help you achieve maximum savings. An excellent idea is to compare product features and prices using comparison websites whenever you can.

Price comparison helps you find great deals on products you were planning to buy. Product comparison helps you find value for your money. Maybe you want to buy a smart TV with a budget of $500.

By comparing different TVs, you get to learn which brands offer the best quality sets. You can compare features and read user reviews to learn about the most durable companies. In doing so, you can save money or buy from a brand with the best products.

Save Your Emergency Funds in a High Yields Account

An emergency fund helps you have money for—guess this—emergencies. More importantly, it shields you from the possibility of borrowing interest-based loans if you ever incur an unexpected medical bill, house fire, or car expense.

Although you can save for emergencies in a normal savings account, a better idea is to put your money in a high-yield savings account. This way, your money accumulates interest.

Most online savings accounts limit the number of times you can withdraw your money in a month. If you exceed this limit, they penalize every withdrawal request. This helps you avoid the temptation of spending your emergency funds unnecessarily.

Prioritize Clearing Debts

It’s hard to save money when you’re drowning in debt. That’s why you should strive to get out of debt as fast as you can. Create a debt plan to help you clear high-interest loans. Also, consolidate your debts.

Consolidating loans can help you simplify payments and take you a step closer to becoming financially independent. Another tip is to clear all the small debts in full so that you’re left with huge loans.

As you clear your loans, strive to make bigger payments for your interest-based loans. Once you get out of debt, focus on increasing your savings. Save as much money as you can. This will help you avoid getting into unnecessary debt.

Build Good Credit

Although everyone dreams of living a debt-free life, it’s not always possible. With a good credit rating, you can make borrowing manageable for you. Most credit card companies give out low-interest loans to people with the best scores.

How do you achieve a good credit score? Pay off your interest amounts on time. Don’t default on any loans and avoid borrowing beyond your means. Don’t fall for peer pressure and try imitating someone else’s lifestyle. Live within your means.


The best way to save money is to make more of it. So, focus on investing some of your savings. The safest way to invest funds is through government bonds with fixed interests.

If you would rather invest your money in an index fund, focus on the big funds like the S&P 500 or Vanguard Growth ETF. Other ways to invest your money include individual stocks, mutual funds, and real estate.

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