Getting your first job and a subsequent paycheck with which you can buy whatever you want is undoubtedly exciting, but with this new financial freedom comes great responsibility. If you’re not careful, it can be easy to overspend at the start of your career and end up having money problems later in life. That is why it is crucial to learn how to manage your money at an early age.
Savings
After you get your first job, your first move should be to open a checking account. Once you have an account, you’ll be able to deposit your paychecks safely. You also need to start a savings account to put aside money for big purchases or financial goals in the future. These can include a car, a college education, a house, a retirement plan, new electronics, vacations, and more.
Emergency Fund
Setting aside emergency funds is a smart move and will help you stay afloat if you ever lose your job, get sick, or get into an accident. A fund of 2 to 9 months’ worth of living expenses is ideal. Start small and invest at least a little bit from each paycheck.
Credit Cards
Consider applying for a credit card. A decent credit score is a must-have to get approved for loans and mortgages with favorable interest rates later in life. If used responsibly, a credit card will help you build your credit history and credit score.
After you get one, make sure you keep track of how much you use your credit card. It’s almost too easy to get yourself into a pile of debt!
Controlling Your Spending
Watch out for the “little” expenses in life because once you get into the habit of saying “Sure, why not,” they start to add up. Here are some simple ways to save:
→ Bring a shopping list on grocery runs and buy store brands when you can.
→ Brew coffee or tea and cook meals at home instead of ordering take-out.
→ Switch to a phone plan that lets you pay for what you use.
→ If you live in a city, switch to public transit. Alternatively, try carpooling or biking to work.
→ When you eat out, consider going at lunchtime instead of dinnertime as prices tend to be lower.
→ Go to early shows at the theater.
→ Take advantage of free shipping options whenever possible.
What Next?
→ Learn about budgeting
→ Create a plan for debt
→ Create a savings goal
→ Check and improve your plans often
