If you just graduated college and are starting your first job, you are in a great position to start your financial life on strong footing. Here are a few tips that will help you get your finances in order as you start your working life.
Contribute to Your 401(k)
If your employer offers a retirement plan, make sure that you contribute to it, starting with your first paycheck. If you start contributing to your 401(k) from your first paycheck, you will never even miss the money. See if your employer will match your contributions and if there's a maximum amount they'll match, and consider contributing at least that amount every paycheck to your 401(k).
For example, if your employer may match contributions up to 5%, try and put aside 5% of your paycheck every month towards your 401(k).
It is also important to note that any contributions you make towards your 401(k) will be taken out of your paycheck before your taxes are calculated. This should reduce your overall taxes that are taken out of your paycheck every payday.
Contribute to Your Savings Account
If your employer allows you to deposit your check into multiple accounts, deposit part of your paycheck into your checking account and the rest of your paycheck into your savings account.
If your employer only allows you to deposit your paycheck into one account, you can arrange to have your bank take a certain percentage of each deposit and automatically transfer it to your savings account.
Putting money into your savings account is a great way to pay yourself first. Over time, you'll want to build your savings account up so that it could cover all your expenses for at least three months. That way, if you ever lose your job or have an emergency, you'll have the cash on hand to cover it.
Try to set a specific percentage that you put aside every month, such as 10%, and stick to that percentage. If you find that you have extra money at the end of each month, you may even want to increase the percentage of your paycheck that you save.
Create a Budget
Finally, even if you feel like you were offered a generous salary, you'll be surprised at how quickly that salary can disappear. Creating a budget will help you be more financially responsible and properly take care of necessary expenses.
The first thing you should do is figure out when your student loans payments will be due and how much they will be. If you have an credit card debt from college, you'll also want to figure out those amounts as well.
Once you figured out how much of your paycheck is going to paying down your debt, figure out how much money you can spend on housing. Ideally, housing will only take up a portion of your paycheck. Remember to budget for your gas, electric, internet, garbage, renter's insurance and phone bill as well.
When you have figure out how much all of those expenses will take up, see how much money you have left over. You will need to create a budget for the remainder of your money. Remember you will need to pay for food, transportation and day to day items.
You may quickly find that bills and loans eat up much of your paycheck; if that is the case, try to find more affordable housing to cut your expenses.
As you start your first job out of college, it is essential that you pay yourself first via your 401(k) and savings account with every paycheck. It is also important that you develop a budget so that you know where your money is going every month; this will help you make more informed decisions about how you spend your paycheck. If you feel like you need a little help, consider contacting a local certified financial planner, such as Global Wealth Consultants LLC, for a little assistance.