After securing your first job, you may ask yourself, “What’s the best way to manage my money?” If this isn’t something you grew up learning, it may take some time to develop good financial habits. With some time to research and your own motivation, you can become a pro at managing your money. Below are three essential strategies for how to handle the money you get from your first job.
Create a budget
First and foremost, create a budget that works for you. Making your first budget comes with a lot of trial and error. If you’re working on a monthly budget, you’ll want to map out how much your take-home income is. Once you have that settled, write down your fixed expenses, such as rent/mortgage payments, car payments, insurance, etc. If there are any variable expenses like an estimate of utility bills or gas for the month, you can add that into your budget as well. Once you have those numbers subtracted from your income, you’ll have a good idea of how much you have left over for things like extra money to play with.
Plan to save
Once your standard expenses are paid, you’ll also want to spend money for fun–but you should save some, as well. Saving allows you to be prepared for sudden emergencies or larger goals like buying your first home. As long as you have good credit and a good chunk in your savings for a down payment, you can look into getting a mortgage pre-approval, which is a smart first step when buying a house. With this process, you’ll learn how much you can afford for a new home and if you need to save more. Take your savings seriously and look into savings accounts that have higher interest rates. If you can sign up for a high-yield savings account, you may be eligible for an APY of 3% or more. This money will add up to a significant savings cushion over time.
Not only is saving a good idea, but investing your savings is even better. Choosing different ways to invest your money is a smart way to grow your income even further. You can decide to invest in things like real estate, people, or the stock market. While investing has more risk than keeping money in a savings account, it’s a great way to make extra money with your savings in a quick and somewhat easy way. The world relies on investors, so why not be one of them?
Now that you have a better understanding of what to do with your new income, you can develop your own routine. Will you choose to budget, save, and invest? Or start with one or two of these tactics? It’s best to use all three of these tips in managing your money, but if you can master at least one, you’ll be in good shape after securing your first job.