Saturday, December 6, 2014

5 Budgeting Tips For Your First Job

So – you've graduated and landed your first “real” job. And now, you probably feel like you're swimming in cash. But as difficult as it may be to believe right now, your financial situation can change at any moment. That’s why it’s so important to budget wisely from the get-go.

You never know what could happen down the road – and in any case, it’s always a good idea to start building up savings. Though you may only be earning an entry-level salary, there are lots of ways to stretch those dollars to save money, avoid incurring debt and set the stage for a lifetime of financial freedom.

The best time to start budgeting and saving money? Right now. Start putting these five budgeting tips to work today:

1. Keep it simple
With steady money flowing in, you may feel ready to buy a house or car, or make other “grown-up” purchases. But doing so will put a serious dent in your cash flow, and there's no need to rush. For a little while at least, stick to renting with roommates (or even living with your parents, if money is a big concern). If you need to, buy a used car or keep the one you already own. You have the rest of your life to worry about a huge car payment or down payment on a house – start saving for it now.

2. Use technology to help you budget
Most people don’t have an innate understanding of budgeting and managing money. Why not put technology to work for you? With an app like Mint, you can stay on top of your financial situation without lifting a finger (or doing any real number-crunching). Just enter in your income, your monthly expenses, and your debit and credit card information, and the app will notify you when you’re exceeding your budget and when important bills are due.

3. Set up your 401(k) ASAP
Many first-time workers don’t think much about retirement planning – after all, retirement seems like a long way a way. But as tempting as it may be to hold off on saving for retirement, the sooner you start, the better your nest egg will ultimately be. Sure, your paychecks will be a little smaller now. But down the road, when you have a sizable amount set aside for retirement, you'll thank your younger self. So review your benefits package, talk to your HR department, and start contributing to your 401(k) – now.

4. Automatically transfer money to savings
Even if you promise yourself you'll take some of each paycheck and put it into a savings account, that can be hard to do. Maybe you’re tempted to make impulse purchases with the money instead – or maybe, despite your best intentions, you just forget. A great way to sidestep this potential problem? Have a small portion of each paycheck automatically deposited into savings. By doing this, you won’t have a chance to miss the money – and you’ll see your savings account grow.

5. Get a head start on student loans
The sooner you're able to pay off your student loans, the better off you'll be. If you can, avoid deferring your loans and start paying them off as soon as you’re financially able. Use a tool like to help you analyze your total debt, your monthly payments and your interest rates to help you figure out the fastest way to pay them off. You'll be amazed by what a difference a few extra payments can make, especially when it comes to interest.

By budgeting and saving from the get-go, you’ll be able to set the stage for financial freedom much earlier in life. What are your tips for budgeting and managing money? Did you budget well with your first job?

Abby Perkins is Editor in Chief at Talent Tribune, a Software Providers blog dedicated to jobs, workplace culture and HR technology.