Finding a good job can be very exciting. You’ve finally graduated from university and you’re ready to use your knowledge and skills to support yourself. You may be eager to be financially independent and not rely on your family anymore.
But since you’re new to the workforce, you may have to face a new challenge: managing your money. Even though you may be ready to show off in your chosen field, you may not be prepared to deal with money and financial responsibilities.
If you do not want to waste every penny on insignificant things, learning money management skills is crucial. Here are some tips for money management after getting a job:
Plan Your Budget
Planning a budget is the first thing you should do once you’ve been approved by an employer. This will help you figure out how much you would need on a monthly basis for certain things.
For instance, you can sit down and make a list of things you usually spend money on. These might include rent, utility bills, credit cards, groceries, and other things. Taking into account how much money you need for this will tell you whether you’ll be able to make ends meet or not.
This will make it easier for you to stop spending cash on things you do not need. Saving money may prove to be very convenient later.
Don’t Jump Into the World of Credit Right Away
Getting a credit card can be very tempting, especially when you want to build credit for later. While it’s beneficial, you should refrain from buying stuff you cannot pay for, especially if you do not really need it. The credit card is indeed there to help you, but some cards have high interest, and you will end up paying more in the end.
Besides, credit cards are best for emergency spending. If you get one, you shouldn’t use it until you know for sure you can pay back the amount before the deadline. Also, don’t use it unless you truly need the product/service you are paying for.
Make Sure to Pay Taxes
When you start working, you’ll have to pay taxes, whether you work for a particular employer or you’re self-employed. The government should give you a tax code that your employer will use to figure out the amount you must pay in taxes.
Meanwhile, if you are self-employed, you’ll need to do an HMRC registration. Income tax will be based on your business profits. Paying National Insurance will also be necessary.
Start Saving for Retirement
Saving for retirement is necessary if you want to live a comfortable life when you reach old age. Even if you’re still in your 20s, this is an aspect that should be on your mind already. You may think there’s still time for it but in reality, the sooner you start, the better.
There are different retirement programs toward which you can redirect part of your salary. The most common are IRA accounts or 401(k) ones. Some employers offer 401(k) retirement savings plans, so you can easily apply for them. If your employer does not offer them or you don’t sign up for them, you can opt for a Traditional or Roth IRA instead.
You can start contributing small amounts to your retirement account. Moreover, when you get a raise, part of it can go to your retirement savings.
Create an Emergency Fund
Life is unpredictable, and we often find ourselves in bad situations when least expected. In some cases, we need money for these events. So, having an emergency fund available can save you.
For instance, you may get unfairly terminated by your employer. In states like Florida, you have up to 300 days after the date of the termination to file an EEOC claim. However, most claims are recommended to be filed within 180 days. In this case, you need to hire a Florida employment lawyer, which can be quite expensive – not to mention that you need money to live until you find another job. This kind of situation requires an emergency fund.
Whether you put $10, $50, or $100 each month in your emergency piggy bank, you will be thankful for it if any unpleasant situations occur. Put some extra money away when you’re in a good financial spot to make it easier to handle financial emergencies.
Final Thoughts
Learning how to manage your money after getting a job is crucial. It sets the line between disaster and a fulfilling life. So, follow these tips to prevent any financial issues.