Congratulations! You have landed your first job. It is an exciting time full of new experiences and challenges. Even as you are going about your responsibilities in the new job, you are probably looking forward to your first paycheck and have already begun a list of things you want to buy.
This is the right time to exercise some caution and have a concrete financial plan in place which is vital in a rising cost and tax environment because of new policy. Developing sound financial habits from your first job will stand you in good stead as you grow your career. Here are a few tips on how to manage your money right from the first paycheck.
Write down your financial goals
It’s critical to write them down as that will bring you greater clarity. Make a note of both short and long term goals. It is all right if your goals change at some point or when you have met one of your short term goals. You are doing this to help you plan your budget and to know how much to save and how much to spend.
Make a budget
You know what your income is and you know your priorities. Some expenses are unavoidable. Set aside a portion of your income to meet those expenses. With the leftover money, you can exercise a greater level of control and where it goes. Remember, you have a goal. Put aside another portion of your income towards that goal.
Keep track of your accounts
You may want to do it once a month or bi-weekly. It will keep you on track with your spending without running short at the end of the month. Keeping your checking accounts balanced will also ensure that there have been no unauthorized debiting of funds.
It is never too early to start saving. Set up a retirement fund from your first job. If you are only able to set aside a small portion of your income towards a 401K offered by your employer or any other available retirement funds, it is still alright. Ideally, you should plan to invest 15% of your income to this fund but you may want to consider investing more with higher energy prices and other costs that are rising in this new environment.
If you must shop, shop wisely. Make a list of things you need and stick to the list instead of getting tempted into impulsive buying. It will help if you make a separate list of things you want to buy and mull over the items for a day or two. You may realize that you can do without some of them, or at least prioritize your shopping list between the things you need and the things you want.
Find the best deals
Scouring the various deals online would give you an opportunity to compare prices and choose the best deal. This is a smart habit to cultivate. There are plenty of deals on every item in the market from clothes to household articles. You will save quite a bit of money by doing your research before shopping.
If you have a desire to travel, you may choose to set up a holiday fund and start adding to it with each paycheck. You will enjoy the trip more when you know that you are not dipping into your funds set aside for necessities and other savings.
It is always best to be prepared for the odd incidental expenses that may come up. It could be as small as your phone bills or tips to porters. Or, it could be the odd repair work that needs attention. Keeping such expenses in mind will ensure that you do not sway from your original budget.
Watch your credit report
You do not want to be caught unawares when you are building your credit history. It is essential that you keep an eye on the credit report regularly as it will help ensure that you are not slipping to a lower rating because of some oversight in settling your bills.
Monitor your progress
Every couple of months, you could study your accounts and compare the expenses incurred. It will give you a better idea as to your spending and saving. You can also plan for an improved lifestyle as you grow in your career and your income increases.
The bottom line
Armed with these tips, you can feel secure and in control of your finances. No one can have a better idea of your needs and wants. Stay focused on growing your wealth as your income grows while you progress in your career.