Congratulations, you got a brand new job! There is a lot to think about during this exciting time,
including how to build up your finances. While it may be tempting to splurge on the finer things
with your new paycheck, now is the time to put your income towards your future. Here are a few
things to keep in mind as you start saving your money during this next phase of your life!
First, look into setting up your accounts. Be sure that you know the difference between a
checking account and a savings account. A checking account is your main source of spending
money; the cash that you get from the ATM usually comes from this account. A savings
account, on the other hand, for money you want to set aside. These accounts actually earn
interest, allowing the money you put in to grow. You should also be aware of the accounts that
are being offered with your new job. A 401k, for example, is a retirement account offered by
your employer; this account takes a portion of your paycheck and typically puts it toward a
group of investments. There are also HSAs, or health savings accounts. Companies offer HSAs
to their employees so they can set money aside for medical expenses. Now is also an excellent
time to start an emergency fund; it is best to put away a portion of your current income in order
to be ready in case you don’t have income in the future.
You should also go over how much you are spending and see if it is suitable with your new
salary. A good way is to sort your expenses into 3 different categories: essential expenses,
nonessential expenses, and financial goals. Essential expenses are the things you need to pay
for in order to meet your daily needs; this includes groceries, rent, and other bills. Non-essential
expenses are items you pay for to treat yourself, like designer clothes and fancy restaurant
meals. Financial goals are goals that you want to reach in the future that will require a good deal
of money; a new house or a graduate degree are good examples of this. Be sure that you are
checking on your expenses periodically; no one spends the exact same amount on the exact
same things all the time! It is a good rule of thumb to review your spending every month and
track any changes.
Starting a new career is also a good time to start building your credit. Your credit score is a
number that shows your creditworthiness to those you may borrow money from. It is best to
keep your credit card balance low and to limit yourself to only one primary credit card.
Remember, all the credit that you use will need to be paid back! Make sure you make your
credit card payments on time. Not only will you avoid the trouble of late fees, you will get a
higher credit score. Having and keeping your credit score high will be helpful for your future
goals, such as getting a loan or buying a house. Having good credit can also help lower your
utility bills and lead to a promotion at your new job!
Finally, you should determine your net worth. This will help you get a clear picture about where
you are with your current finances. You can figure this out by simply adding up the value of
everything you own (like cash assets and property), then subtracting the value of everything you
owe ( like bills and loans). When it comes to what you owe, you should examine your debts
closely. There are smart debts that are worth getting into, such as student loans and mortgages;
these are investments into your future. What you need to watch out for are bad types of debt.
One example of this is a credit card with a high interest rate; you end up paying more money
than you initially credited, and that is just a waste!
Written by Athena Bank.
Athena is a financial education platform that can help you with both your budgeting and
investing goals. Visit our website: www.athena-bank.com!