65% of Americans save little or nothing. When retirement rolls around, you might start struggling.
A new, better-paying job is meant to feel exciting! It’s also an opportunity to improve your financial situation and prepare for the future. With this guide, you can do just that!
Here are seven tips for managing money after you start a new job.
With these tips, you can prepare for the future and craft a nice little nest egg for yourself. Ready to start saving?
Keep reading for everything you need to know about managing your new paycheck!
1. Track Your Spending
In order to properly save money, you first need to know how much you’re spending.
Take a look at your finances for the past month. Where are you spending the most? Where can you afford to cut back?
Make a list of which expenses are essential each month. Throughout the month, organize your spending into different categories. These can include:
- Transportation
- Entertainment
- Food
- Rent
Organizing your spending into different categories will help you recognize where most of your paycheck goes each month. Then, you can use this information to determine where to cut costs.
2. Create a Budget
Now that you know how much you’re spending each month, create a budget.
Determine how much you want to spend versus save each month. Having a specific number in mind for both will allow you to set a tangible goal. Setting a budget will make it easier to achieve your long-term savings goals.
You can also set smaller budgets for each of the categories mentioned above. If you need to spend more on entertainment one month (maybe due to a birthday party), adjust the budgets for the other categories.
It’s important to note that budgeting is a habit. It might take you a month or two before you develop the habit. With consistency, however, you can maintain your budget without overthinking it.
Remember to set a hard number for how much you want to save versus spend.
Then, study your expenses for the month. Are you still overspending? If so, take a look at your budget and make changes again.
3. Tackle Debt
As you use these tips for managing money, you need to look at every area of spending. That includes your debts.
While setting your budget, make sure to leave a spot for paying off debts each month.
If you have credit cards, you may have developed a habit of paying the minimum each month. However, breaking that habit is important to cut down on the interest you’re paying. Only paying the minimum can drag your repayment out a decade.
Don’t leave yourself with thousands of dollars in interest. Instead, make it a priority to handle your high-interest credit card debt off first.
What other debts are holding your back? Evaluate your debts. Then, focus on which ones you can pay off as soon as possible.
Paying off these debts will keep the interest from stacking up and taking you down.
4. Handle Loans
Student debt is higher than ever with $1.5 trillion between 45 million borrowers. In fact, US student loan debt is the second-highest consumer debt category. It falls right behind mortgage debt.
You usually have three to six months after you graduate to start paying off student loans. Use this grace period to your advantage. Start making a plan for how you’ll tackle these loans.
As with your debts, paying off these loans as soon as possible is essential. Otherwise, the interest will start stacking up and eating at your savings.
Find out how much your minimum payment is. Then, calculate that in while you’re setting a budget.
While it’s important to pay off your debts and loans, you also don’t want to neglect your emergency fund.
Make a plan to put a little money into your rainy day savings account each month. If unexpected expenses pop up, you won’t have to add to your debt or take out another loan. Instead, you can lean on your emergency fund for a little support.
Tackling your high-interest debt and student loans first will help you avoid interest.
As you use these tips for managing money, make sure to find a balance between building your savings and tackling your debt. Otherwise, your credit score could take a hit.
5. Automate Your Savings
In order to make saving money a regular habit, set it up automatically.
You can set to have a specific amount of your paycheck moved into a savings account. That way, you won’t have to worry about forgetting. Setting aside a little money every few weeks will help you build that emergency fund nest egg.
That way, the money is there when you need it.
You have a few options. First, consider a high-yield savings account. If that’s not ideal, try a money market account or a CD account.
Remember to check the interest rate you can earn, fees, and minimum deposit requirements before making this choice.
Don’t forget to consider how accessible the money is, too. For example, a high-yield savings account will only allow six withdrawals a month. A CD, on the other hand, requires you to wait until the CD matures before you can withdraw savings.
Look for easy, affordable places to cash checks before putting money into your savings.
6. Plan for Retirement
While paying your debt and saving money is important, don’t forget to think about why you’re saving in the first place. If you’re starting your first job, retirement might feel like eons away. That doesn’t mean you should wait to start saving.
Every small bit you save will add up with compounding interest.
Ask your employer if they offer a retirement plan, such as a 401k.
7. Reward Yourself
After working hard to get that new job, reward yourself a little. Budgeting and saving are both important, but you should still treat yourself. Consider adding a slush fund as part of your budget for fun activities (or shoe shopping).
Treating yourself every once and while will help you focus on your budget for the long-term.
Cha-Ching: 7 Tips for Managing Money With Your New Gig
If you recently started a new job, congratulations! With these seven tips for managing money, you can make the most of that paycheck. Stretch your savings with these seven tips!
Explore our recent Building Your Wealth posts for more helpful tips!