And finally, you’re hired! What does it mean? Getting your dream job means that you’re officially an employee and that you can start planning for a very bright future ahead. Working for your dream company is a huge step to reaching your dreams and earning money.
But is that all? Truth be told, being an employee comes with responsibilities. Indeed, you’ll earn, but it’s essential to learn how to manage your finances. Before you think about spending your hard-earned money, it’s critical to learn to allocate money so you won’t end up spending them all on unimportant matters.
Employee or not, a person needs to learn to budget. Many first-time employees feel overwhelmed in receiving their first-ever paycheck. And since it’s their first time to handle their very own money, it’s easy to lose control and spend it poorly.
For starters, compute how much your take-home pay after deductions like taxes. After doing so, calculate your monthly needs such as food, groceries, and daily allowance. Make sure to compute your bills too.
Once in a while, indulge in the things you want but don’t necessarily need, like attending concerts or getting a new phone. Tracking where you put your money is a good practice as it prevents you from overspending. It ensures that you have enough money to save and spare until you receive your next paycheck.
There’s nothing wrong with enjoying your earnings in the first few months, but that should be a temporary thing only. After two or three paychecks, plan how you’re going to save money for your future. Saving doesn’t necessarily mean that you can no longer have fun, you can still travel, eat in restaurants, or shop for clothes, but there should be a limit.
Open a savings account where you can deposit money. Make sure always to have savings goals to achieve. If you’re planning to buy a car or visit a new country in the near future, budget how much you’ll need to spend on these things. Besides, having a savings account is often a prerequisite if you plan to open a checking account.
Pay Back Your Loans
If you come out of school with loans, it’s time to plan to pay them back. In most cases, graduates need to start paying back half a year after they leave the campus. Six months is the typical grace period given to students so that they can adjust their finances first.
But don’t worry too much. There are many payment options nowadays to help you pay without compromising your finances. You have to be responsible for paying off your student loans on time so you can finally live debt-free.
Talk to your HR offices and ask if they have any refinancing programs with lending partners. This method can help you pay off your student loans while enjoying the benefit of independent life.
Create an Emergency Fund
Being an “official adult” comes with many surprises, from sudden car repairs to medical situations. And sadly, many adults are not prepared for these unanticipated expenses. According to studies, 61% of millennials don’t even have emergency funds.
Make it your goal to have at least two months’ worth of your salary in your emergency fund account. By doing so, you will not be forced to swipe your credit card to its maximum and end up in a financial crisis. Don’t start big. At first, save only what you can. And slowly adjust your finances when your earnings become bigger.
Raise Your Credit Score
Building your credit score is much easier while you’re still young. You can enjoy numerous benefits if you have an excellent credit history, for instance, getting a lower rate on refinancing your student debts.
A good credit score is also essential if you plan to mortgage a home in the future or buy a new car. To build your credit score, make sure to pay your bills on time, avoid developing bad spending habits, and don’t go beyond your credit card’s limits.
As a new employee, remember that you’re just starting. Someday, you will get a well-deserved promotion, a bonus, or a raise as a reward for your dedication. As your earning go higher, make sure to save more. The rule of the thumb is to save at least 50% of the bonuses you receive. That way, your savings account will significantly increase, but you can still enjoy your spare money.
As you can see, earning doesn’t mean that you can spend your money as you wish. You have bills to pay, goals to achieve, and savings to accomplish. By following these tips, you can ensure that you have money during emergencies and enough savings for your personal goals.