You just received your very first paycheque from your very first “real” job out of university — in an industry you went to school for, no less. Congratulations! This is no easy feat for a new graduate entering the workforce today.
While it might be tempting to celebrate your newfound employment with new shoes and a night out with friends, read this before you spend a single cent. Managing your money wisely as early as payday number one can help you create a secure financial foothold.
Create a Budget
Sit down with your finances to figure out where your money needs to go this month. Bookmarking money for essentials like rent and groceries is an essential part of good money management. These expenses belong in your “pay first” pile, along with the following purchases and bills:
- Utilities
- Internet and phone bills
- Insurance payments
- The minimum payments on student loans, credit cards, and lines of credit
- Transportation costs
- Basic household goods and toiletries
Build an Emergency Fund
You can successfully budget for the essentials and think you’re clear to splurge on those concert tickets you’ve been eyeing. Next thing you know, your car’s muffler is dragging on the road as you drive to work, and these repairs drop an unexpected $500 in your lap.
You can’t delay or ignore this repair when you need your car to earn a paycheque — even if you don’t have any cash left in your budget. That’s why emergency funds are so important. They help you handle unexpected expenses that come out of the blue.
You should set aside some cash each month in a high interest savings account to grow a capable emergency fund. While your savings are just starting out, you might consider adding a line of credit to your emergency fund safety net. Check out a lender like Fora to learn more about this financial backup in emergencies. You can find out how to qualify for a Fora Credit line of credit online while you’re at it.
Talk to Your Employer about Retirement Plans
Sure, you just joined the workforce, but it’s never too early to start saving for your retirement. In fact, savings have the greatest chance of flourishing into a proper retirement fund when you start young.
Talk to your employer or HR department to discuss whether they offer company-sponsored retirement savings plans. Contribute enough to get an employer match, if that’s available. An employer match doubles your monthly savings — it’s essentially free money!
Live Below Your Means
Resist the urge to immediately upgrade your lifestyle with a bigger apartment, new car, better gadgets, and other luxury items. This can kickstart a nasty lifestyle creep that slowly eats up all your new expendable cash until you have no financial flexibility — every dollar goes to car financing, student loans, and credit card debt.
Ideally, you should understand the difference between needs and wants. You should also check in regularly with your budget to prevent small expenses that accumulate over time.
Plan for the Future
Now that you have a regular paycheque coming in, you can start thinking about the money moves you want to make in the future. This article has already covered the basics with emergency and retirement funds. But it needs some tweaking to reflect your unique needs and wants out of life.
Take the time to establish short- and long-term goals, like saving for a vacation, buying a home, or paying off debt. These tips can help you manage more than just your first paycheque but all the ones that come afterward, too.
