So, you got your first job and you’re going to have steady cash coming in every month.
Congratulations! After you’re done with the celebration, it’s time to think and plan for your financial future.
Here are some tips to get you started:
1. Track your Spending Habits
Monitoring your cash flow is one of the first steps you can take towards financial independence. You need to make sure you’re spending less than the amount you make.
So, take stock of your current spending habits and differentiate between what you need to have and what’s nice to have. If you need to, cut down on the latter.
2. Create a Budget and Review it Regularly
Budgeting will make it easier for you to take control of your cash flow. You will understand how much money is available to you after subtracting your fixed bills and necessary expenses like groceries.
3. Make Saving easy for you
Don’t wait to get serious about saving. Start right after you get your first paycheck. Saving is hard, it’s more tempting to impulse spend on that latest gadget, high-end restaurant, or new shoes than putting money in your savings account.
So, make it easier for yourself and automate the process with a digital savings account. Try going for a bank that offers a high-interest rate and takes a minimal commission.
4. Save for an Emergency Fund
When you land your first job, you might not be thinking about what happens when you lose your job, but it’s wise to prepare yourself for unpleasant surprises.
So, think about the amount of money you need to sustain yourself for three to six months without a paycheck. That’s your emergency fund. An online savings account will come in handy here because it’s secure and provides easy access to your funds.
5. Prepare for Big Future Purchases ahead of Time
Several large purchases will crop up in your adulting journey. One way to make sure you never go wrong is by doing your research.
So, research and read reviews on that refrigerator, oven, washing machine, and water heater that you plan to buy in the near future.
That’s how you’ll get quality products at good prices that will last you a long time and save you money in the long run. Preparing for these big purchases will also make sure that they don’t upset your budget.
6. Define your Financial Goals
Try to map your financial future and figure out your priorities when you first start earning.
Do you want to save for a car, apartment, house, wedding, travel, or something else?
When do you expect to achieve these financial milestones?
Can you save enough for your future with your current income, or do you need to cut costs and explore other options?
Ask yourself questions like these and put your financial goals on a timeline.
7. Learn about Investment and Start Small
It’s never too early to start investing. Don’t let all your money sit in the checking account and keep losing value. Start investing with low-risk avenues like mutual funds.
In the meantime, equip yourself with the knowledge you need to explore more options. Try to diversify your investment portfolio and avoid putting all your eggs in one basket.
8. Be Careful of Lifestyle Inflation
Most people will admit that they start spending more as they earn more and that’s not necessarily a bad thing.
However, if you keep finding ways to splurge after your income rises, you might be pushing your financial goals further away.
If you’re not financially independent yet, making sure you have enough savings should be your priority. So, you might want to wait before you take that loan for a new car.
Getting your first real job is an exciting milestone in your adult life. Taking steps to manage your money now will go a long way. Happy adulting!