Arguably the most important thing you can do for the health of your financial future is to start saving for retirement, regardless of where you are in life. This is something you can ideally do over the course of your entire career, but the sooner you start, the better. Set up a 401(k) plan with your employer. Hopefully, the company will match at least a percentage of your contributions.

1. Start saving for retirement

In addition to retirement savings, you should have a savings account with two to three months of income in case an emergency arises. Consider investing any other savings you accrue in the stock market, which could give you a better return on your investment. If you’re unsure of how and where to allocate your savings, work with a financial advisor to develop the best possible plan for your money.

3. Save smart

This is a simple and obvious tip that your parents should have taught you: Don’t spend more than you make. If you do spend more money than you earn, you are likely getting the money from someone else, or borrowing it from a lender. Neither option is good. Spending more than you earn likely means you are in debt, and not saving enough money — if any at all. That is not a good financial position to be in.

5. Spend less than you earn

Unless you’re very wealthy, it’s wise to avoid ever buying a brand-new car. The reason? Automobiles depreciate very quickly and steeply, meaning they’re not a good investment. If you try to sell the vehicle a few years later, you’re going to get much less than you paid. Instead, purchase cars that have been leased for the first two to three years of their life. You can then reap the benefits of a car knowing the previous owner took the depreciation hit.

10. Never buy a brand-new car

Everybody needs a budget. It helps you keep financial goals in full focus, and prevents you from spending more than you have. It also allows you to zero in on poor money habits and break them. Budgeting can help you prioritize saving money, which is vital to your financial health.

12. Have a budget

Always pay yourself first. That means you should automatically earmark a part of each paycheck for savings before you spend it somewhere else. This is a surefire way to make sure that you are saving money.

2. Pay yourself first

Some parents will tell you to avoid credit cards altogether, but there’s a better option: Get a card or two and make sure to pay them off every month. This will help you to both <a href="https://financebuzz.com/clever-debt-payoff-55mp">stay out of debt </a>and to build your credit score, which is the backbone of your financial health. Pro tip: Up the ante by using <a href="https://financebuzz.com/best-rewards-credit-cards">rewards credit cards </a>, which can give you everything from cash back to travel discounts and discounted gas.

8. Pay off credit cards every month

Find ways to create passive income, which is money that comes in without you having to work hard to generate it. Investing is one popular way to make passive income, as your money does the work for you. You also may be able to generate passive income from a rental property or collect ad revenue from content you create.

4. Find a way to make money while you sleep

Going to a four-year college and getting a bachelor’s degree — or completing a course of study at trade school — is usually worth it. Higher education means you increase your earning potential when you enter the job market, so invest in yourself now for benefits that come later.

7. Invest in yourself

As cliche as it may sound, don’t put all of your eggs in one basket. Yes, you want a full-time job with benefits, PTO, and a shiny 401(k). But <a href="https://financebuzz.com/ways-to-make-extra-money">a side hustle </a>is also a good idea. That way, if you lose your job for any reason, you have something to fall back on. You can diversify your revenue stream by driving for a rideshare app, doing some contract writing on weekends, or flipping a house, to name a few options.

9. Diversify your revenue stream

Borrowing money means you’re going to have to pay it back somewhere down the road, so make a plan for your debt that accounts for that. Yes, some loans may be necessary — such as student loans or a mortgage. But be very smart about how you borrow.

6. Be wary of loans

It may sound like a tough stand, but there are several reasons you shouldn’t lend money to friends. For starters, that’s money you could have working for you in investments. There is also a good chance your friend will never pay you back in full. So, you may wind up with a ruined friendship, or at least know that you have enabled someone with bad financial habits.

11. Never lend money to friends

Understanding these money truths can move you beyond living paycheck to paycheck and into financial stability.

Become a master of your financial future by following these money lessons your parents should have taught you.

3. Save smart

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