After countless hours of preparation and multiple interviews, you’ve finally received the job offer! Landing a new job is a cause for celebration, but just like anything new there can be some worry and anxiety that comes with the excitement. Planning for the future is a big part of starting a new job.
helps you determine your short and long-term and create a balanced plan to meet those goals. In order to successfully plan for the future its important to develop smart . Here are some tips to keep in mind while awaiting that first paycheck.
1. Take stock of your
Whether it’s medical bills, , or student loans that have you in the red, create a plan for how to get back into the black.
Ranking your in order of size and starting with the smallest – is a strategy that expert Dave Ramsey calls the “snowball method” The idea is that each time you pay off one form of , you build momentum.
When it comes to student loans, it’s important to realize that you aren’t doing yourself any favors by waiting to see if your lender has noticed you’ve graduated. Some loans have a “grace period” or a six month time before you need to start making payments, but interest is still accumulating during this time. It may make more sense to begin paying off these debts right away.
2. Contribute to a
Your first thought might be, “I’m too young to even be thinking about . I just started my career!”
Ironically, according to experts, young people are able to save the most effectively. accounts benefit from so the earlier you start the better.
Experts are stating that social security may run out of by 2035, at any rate, the benefits social security offered to older generations will not be available at the same amount to younger generations. This statistic makes it even more important to start saving for as early as possible.
If your new job offers a 401(k) and matches your contributions not using the account is essentially giving up free . If you don’t have access to a company-matched there are other options available that could be a good fit which you can check out here.
3. Set up a budget
I know, a budget sounds boring, but it’s important, especially when beginning your first job to ensure you’re bringing in more than you’re . Once you know what your paycheck will be write down your monthly as well as upfront expenses that you already know of such as rent and utilities. Setting up automatic payments for recurring payments like rent, insurance, and utilities helps to put your mind at ease when looking at the different payments you need to keep track of.
In order to know how you’d like to have saved and how much you can spend, think about the goals you want to reach in the next five to ten years.
You can use an app like Mint, Personal Capital, and Level to track where you’re the most and where you can cut back a little. You can also use a spreadsheet on your computer or simply record your everyday purchases in a notebook or on your phone.
There are also several different methods of budgeting to consider trying out to see which one works best for you.
A popular budgeting method is the Envelope Method: a way to track exactly how you have in each budget category for the month by keeping your cash in separate envelopes. At the end of the month, you can see how much cash is left by simply looking at each envelope.
Putting all of your savings in a separate can help you stay on track with all of your savings goals, as well.
4. Build Your Credit History
If you eventually want to take out a loan to purchase a home or a car, it’s important to build your credit history.
If you have no previous credit history you can use an app called Self to build your credit. This app takes a loan out for you, but holds onto it so no is needed. You pay off the amount over a year to two years, and at the end of that time period, you have a great start to your and the you’ve been paying Self in savings.
Of course, you may want to get a credit card or small loan to build credit. A credit card can be a great way to build your credit if used responsibly. Many banks offer great entry-level credit cards to help individuals build credit. Wells Fargo even offers a credit card that has special benefits for students.
There are some tips to keep in mind when using your credit card though, if you use more than 30% of your credit you can risk damaging your score. Staying out of the habit of more than you can afford to repay is important, as well. Paying the minimum amount required will keep your account in good standing, but paying in full by the due date will save you on interest.
5. Set specific savings goals for future purchases
According to a 2016 GOBankingRates survey, 69% of Americans have less than $1,000 in their savings accounts – and 34% have no savings at all.
There are going to be bigger purchases in your future, such as a car, home, graduate school, or an education for your kids. The sooner you start setting aside for these expenses, the better.
Of course, having an is an important part of being smart with your finances. You never know when an unexpected expense like a flat tire, home maintenance, or other emergencies can happen so it’s better to be safe than sorry. A good rule of thumb is to have 3-6 months worth of living expenses saved up as part of an . It’s liberating to know that should anything happen, you’re always financially ready.
There are quite a few online high yield savings accounts that you can set up to automatically deposit a percentage of your paycheck. Savings can build up fast when you set it and forget about it. Experts recommend having three to six months of living expenses in savings in case of job loss or injuries.
No one becomes rich overnight, in order to have a stable its important to establish when it comes to . The above are important to your career growth and your overall success.
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