5 financial tips for newly-employed young people
Summer. A time for barbeques, trips to the beach, ice cream and, for many teenagers and young adults, their first jobs. What better time, then, to educate the newly employed about sound financial practices, before they’re tempted to spend all of their hard earned income having a good time?
Instant gratification is tempting, but making efforts to teach young adults how to adopt sound fiscal practices will set them up for a lifetime of financial solvency and independence. And, with the right financial savvy, young consumers could presumably afford to spend a little extra when it’s time to “have a good time.”
Here are five tips to share with the newly employed people in your life:
Save, Save, Save!
Saving can be as simple as setting aside a certain portion of your paycheck to go directly into a savings account each pay period, rather than in a checking account. If your employer offers direct deposit, select a specific amount or percentage of each paycheck to go directly into a savings account. If you don’t have direct deposit, you can commit to put 10 percent of each paycheck into a savings account. You can’t miss what you never saw in the first place.
Learn to Budget
If you don’t know how much money you have coming in and how much you have going out every month, it is difficult to plan. Assess how much you make each month. Then, figure out what fixed costs you have—rent, utilities, commuting expenses, gas, discretionary spending, and other one-time expenses like holidays, gifts and vacations. That will give you a better sense of what you can and can’t afford.
While large purchases and expenses—a home or a car, or starting a family—may seem a long way off, preparing for the future now, financially speaking, can put you in a better position to make those large financial decisions. So what can you do? Forego cable television for a Netflix subscription, bring your lunch to work most days, skip Starbucks and drink the coffee offered at work or make it at home, buy a few quality items of clothing and avoid cheap, ill-made pieces..
It’s simple–if you can’t afford something, don’t buy it. Instead, devise a plan to save up until you can afford to purchase the item without debt. Sometimes waiting can make you realize the item isn’t that important, or you might find a way to make this purchase fit into your budget. Another way to avoid debt is to learn the difference between your wants and needs.
Also, be mindful when signing up for a credit card that it should be used responsibly. While convenient, and at times, necessary, credit cards make it easy to overspend.
Ask for Help
Becoming fiscally responsible takes time and guidance. Don’t be afraid to ask for help! Friends and family may have different suggestions for how to save or invest your money, or handle college loans. Sometimes those that know you best can offer solutions that will best suit your needs.