I hope you are having a great summer!  We have been a little too busy over the past few months, but continue trying to make the most of our time by focusing on family, frugal living, and being responsible with money.  I’m pleased to share the following guest post for your reading pleasure, about being a financially responsible adult, and promise that there is lots of new content coming very soon.

Adulting.

Maybe you’ve heard this new verb that’s come of age recently. Basically, it means successfully doing all the things adults are supposed to do.  It’s what a lot of 20-somethings fresh out of college are struggling to master.  Heck, a lot of 30 and 40-somethings are still trying to master it – especially when it comes to finances.

It’s nothing to be ashamed of – getting and keeping your financial house in order can be challenging. Trust me, I’ve been there.

However, if you can follow these few pieces of advice, you’ll be well on your way to achieving financially responsible adult status.

Use a Budget

First of all, use a budget. This doesn’t have to be scary or difficult. It’s simply a financial plan for how you’ll use your hard-earned money every month.

Your budget is the foundation you build your financial house on.  Without a solid budget, it’ll be harder to meet other financial goals and to follow the advice in this post.

If you’re not already budgeting, you need to be.  The good news is, it’s not hard to get started.

Start simple: Write down your monthly income and a list of your monthly expenses.  For simplicity’s sake, treat savings as an expense.

OK, do you have enough money coming in to cover the expenses?  If so, great!  That means you’re probably not living beyond your means (assuming you’ve correctly estimated your expenses).

If you have a surplus, that’s even better – add more money into a savings category.

If you’re coming up short, it’s time to start cutting some expenses.  Some expenses are fixed and maybe can’t be changed right away (like your mortgage bill).  But others, like maybe your food budget, are more variable.  You can always cut down on eating out or try meal planning to save money at the grocery store.

Once you establish your budget, make sure you regularly track your spending and balance it. It’s no good to have a plan if you’re not going to make sure you follow it.

Start Saving for Retirement

Financially responsible adults know it’s important to plan for the future.  If you haven’t already, it’s important to start saving for retirement.

If you’re not exactly a savvy investor, don’t worry – you don’t have to be.  This Investing for Dummies guide, written by yours truly, has you covered.

In the meantime, a great place to start is with your employer-sponsored 401(k) plan, if you’re lucky enough to have one.

With 401(k) plans, you contribute a percentage of your annual salary and your employer often matches it. That means you’re essentially getting free money toward your retirement from your employer.  My advice is to contribute at least enough to get the maximum employer match, and more if you can.

If you’re already on top of your 401(k), you might want to think about an individual account like a Roth IRA. By setting a regular, automated contribution that fits within your budget, you’ll build a solid nest egg over time.

Investing early is a huge benefit because it gives you an advantage that can never be recovered once it’s lost – time.  When it comes to investing, time is your best friend, because of a little thing called compound interest.

Compound interest basically means that you earn interest on money invested, and then in the future, earn interest on that original money + the interest earned, over and over and over again.  Trust me, it’s a good thing.

While you can’t get back time that’s already lost, you can prevent any further loss by starting to save for your retirement today.

Pay Your Bills on Time

If you made yourself a budget, you now know what your monthly bills are.  Good.  Now make it a habit to always pay them on time.

Seriously, you might not think it’s a big deal, but missing payment due dates can mess with your credit score and make your financial life more difficult.  No one needs that.  Responsible adults make their payments on time.

This applies to your monthly living expense bills as well as any student loans you might have.  Whether your student loans are serviced by FedLoan or another servicing provider, you want to make sure that you work with them to set up a payment plan you’re able to follow.

Automating your regular monthly payments is a good way to make sure you’re never late.  Just make sure you always have the money to cover the payment, whether it comes from your bank account or your credit card.  If you’re sticking to your budget, that shouldn’t be a problem.

Build an Emergency Fund

It’s not as exciting as saving for a dream vacation (also a worthy savings goal, don’t get me wrong), but financially responsible people know better than to skimp on their emergency fund.

You need to have some money stashed away in case something big comes up.  What if you lose your job or have to pay for a big car repair?  If you don’t have a backstop, either of these situations could spell financial disaster.

The best way to start your emergency fund is to set up a separate savings account solely for that purpose.  Then, build a regular contribution to your efund into your budget.  (Hot tip: An automated transfer works great for people paid on a regular schedule because it’s one less bill to manage).

If you haven’t already, start your emergency fund ASAP.  Believe me, you won’t regret making the responsible choice.

Don’t Overdraw Your Bank Account

While we’re talking about financial responsibility, do you know what’s pretty irresponsible?  Overdrawing your bank account.

Consistently overdrawing your account isn’t just irresponsible; it’s just a terrible financial practice.  Here are a couple of reasons why:

• It costs money – You don’t need to rely on overdraft. Manage your money better and save on the fees. That’s money that could be going in your retirement account.

• It normalizes the idea of living in debt – However you want to spin it, if you’re living in your overdraft, you’re in debt, and debt sucks – especially at those rates. If you can’t get through a normal month without using your overdraft protection, then it’s time to go back to the drawing board with your budget and make some changes.

Final Thoughts

Being a financially responsible adult isn’t always fun in the short term.  Few things that matter typically are.  Still, if you adopt the advice in this post, you’ll find your life and your finances will become a lot easier to manage – now and in the future.  

Greg Johnson is a personal finance and frugal travel expert who leveraged his online business to quit his 9-5 job, spend more time with his family, and travel the world. He is the co-owner of the popular blog Club Thrifty, where he teaches others how to spend less and travel more.