Whether you are a recent college graduate or someone finally breaking into the career of your dreams, getting your first big job is a big deal! Handling the paycheck that comes with it gives you newfound autonomy with your finances. Here are some considerations when managing your money for the first time.
1. Create a budget you can believe in
To create a budget that works for you, you need to understand how you get paid. Companies may pay you weekly, biweekly, or monthly. Knowing when you get paid is essential to start working on your budget. With a consistent pay schedule, you can plan out your regular bill payments, the best times of the month to go grocery shopping, and when you can splurge on an item and treat yourself. Making a budget that encompasses all your needs and has a stipend for your wants/emergencies creates smarter spending and saving habits that last a lifetime.
2. Have more than one savings account
With budgeting comes saving. It is important for your financial success to regularly take a chunk of your paycheck and deposit it into your savings account or accounts. Having multiple savings accounts can give you a better visualization of how your saving progress is going. Consider maintaining separate accounts for vacation, larger investments, a rainy day/emergency fund, and even holiday expenses. Set up your direct deposit to automatically allocate your paycheck to these various funds.
3. Plan for big expenses
Prioritizing big purchases helps you understand the importance of smart saving and spending. Consider big-ticket items like transportation and housing. The deciding factor on whether to fix up your old car or buy a new one may be the amount of money you have saved. If you see buying a house as a possibility, understanding how much you will need to save and how much you are willing to spend is more critical than just being preapproved to buy a home. Take time to plan, save, and build up your credit score; this is beneficial when making bigger purchases and commitments.
4. Leave some room to invest in yourself
Now that you have a new job with a regular paycheck and a budget you feel comfortable with treat yourself. It is ok to invest in yourself by buying new clothes or a new phone. You are moving into the career of your dreams. Celebrate this new chapter of your life and all your hard work.
Being able to manage your own money is a huge step. Take the time to learn about financial literacy on many levels, such as saving, investing, credit cards, and your credit score. Many banks have great educational tools online that can help you manage your nest egg. Analyzing your finances and starting good habits will help you create a healthy game plan for your future.
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