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How to set a budget, repay debt and reach your financial goals

Becoming an adult opens up the door to a lot of "firsts" in your life, Your first "real" job, your first car, or your first independent holiday. At the same time, you may be paying rent, utilities and other bills for the first time. As you can see, with all those exciting events there are a lot of financial firsts

Meeting your costs and commitments, while saving up for the things you want, can be a challenge. Here are three financial habits that may help:

Set financial goals

Setting specific financial goals can give you a clear sense of purpose, as well as a destination to head towards. It can be helpful to think in terms of short, medium and long-term goals. For example:

  • What do you want or need to purchase in the next 12 months?

  • What breaks or holidays do you plan to take?

  • What high interest debts would you like to clear?

  • What are your medium-term plans (e.g. saving for a home deposit)?

  • What savings might you need for your long-term future?

When you're young, and you have lots of competing priorities, remaining focused on your savings goals can be hard. But these tips might help:

  • Write your goals down, and keep them somewhere prominent, so that you are reminded of them regularly.

  • Break big goals down into a series of smaller ones, so that it's easier to keep track of the progress you're making.

  • Get friends or family involved, so that you feel more accountable for achieving your goals.

Learn to budget

Keeping a budget comes down to simple maths: you need to make sure that your monthly costs and expenses are less than your income. If you can do that, then you'll be able to stay out of debt and save for your future.

A good starting point is to learn to budget effectively. Creating a budget will help you to record your income and expenses, and monitor your spending, providing the peace of mind that results from taking control of your finances. There are plenty of mobile apps that can help you get in the habit of creating a budget and sticking to it.

Have a plan for repaying debt

It's normal to borrow money at some points in your life, whether it's to buy a car, pay for a holiday, fund your education, or to buy a home. Managing your debts can seem challenging at times, but it is often easier if you have a plan for how you'll repay them. Before you take on debt make sure you do the following:

Review the contract in its entirety. Be aware of the terms and limitations of your contract. If you don't understand something, ask.

Make a plan to pay off the debt. Before you take on debt, make a plan to repay it. This will help you to stay on track and avoid any consequences of a missed payment.

Track it. As you take on debts in the form of loans, credit cards or bills, make sure you review your repayment progress regularly. Keep track of your credit score or rating, and monitor it for any suspicious activity. Report anything you don't recognise straight away.

Getting into the habit of saving money while you're young is important, but it can seem difficult when you are managing debt repayments at the same time.

Consider making it a priority to repay high interest debt first, before putting aside savings. If possible, you should try and build up savings in addition to making those payments.

Learning to become financially independent isn't always easy. However, by establishing a handful of healthy financial habits early on, you are investing in your future financial health and wellbeing.

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