5 money rules every millennial should live by

Making smart money decisions while enjoying your 20s is a tough balance. Follow these money management tips to help setup your financial future.

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Your 20s is definitely one period of your life when you experience the most change. Graduating from college. Moving into your first apartment. Getting your first job. There are many milestones in this decade of your life. It's also an important time to start building a healthy foundation for the years ahead, and an integral part of that is your finances.

As a 20-something, you might not be thinking much about money. Your motto in life might be "YOLO" or you only live once. While you should have fun in your 20s, it's also important to make smart money decisions.

What you do now can have an impact on your finances years down the road. If you're a 20-something ready to get serious about money, here are 5 money rules you should live by:

1. Live within your means

No matter how old you are, the number one money rule you should follow is to live within your means. Simply put, don't spend more than you make. Getting yourself into debt is easy, but getting yourself out of it is much more difficult. Don't put yourself in that situation—learn to create a lifestyle that is sustainable on your income.

2. Start an emergency fund

Life can be very unpredictable. That's why you should prepare yourself for anything. Having an emergency fund will make those unplanned moments much easier. You really never know what can happen, and you want to have a buffer to help pick yourself back up in case you need to. Start small with your emergency fund and ultimately aim to have a minimum of 3-6 months of expenses on hand.

3. Monetize your passions

You might not have the job of your dreams in your 20s, but it's a good time to discover your passions. It's also an even better time to discover how you can turn your passions into an additional source or, eventually, your main source of income. In your spare time, hustle and figure out what it is you really love. For instance, if you love to write, start a blog. Your willingness to initiate could turn into something really awesome.

David's note: I'm a prime example of how a bit of bravery and some luck can pay off. I started this site while I had a full-time job. I never intended for it to make serious money, but the site is now my family's primary source of income. I love my lifestyle, but I never dreamed of working for myself building a website. I fell in love improving this site, and it just happened.

Do you have a passion for something? Get into it and see what happens. You never know.

4. Begin saving for retirement

You might not be thinking about retirement just yet, but the earlier you start, the better off you will end up. The more you invest in retirement accounts now, the more money you could see in retirement later. Start by investing in a 401(k). If your company offers a matching contribution, make sure you maximize that opportunity.

5. Don't compare yourself to others

This isn't a rule that applies just to money but also life in general. Don't compare yourself to others. It's easy to look on social media and get a flawed perception of reality. It may seem like everyone is doing well and affording extravagant things, but remember that everyone's situation is different. Don't try to live up to someone else's expectation of what life should look like. Live well but spend wisely.

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Article copyright 2018 by MoneyNing. Reprinted from the Novembe 25, 2018 issue with permission from MoneyNing.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.

Investing involves risk, including risk of loss.

The third-party provider of the reprint permission and Fidelity Investments are independent entities and are not legally affiliated.

Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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