Those first few years completely free from parental supervision and financial support bring some very exciting firsts. First apartment, first job, first budget . . . It can all be very overwhelming. With everything happening all at once, it can be hard to know what is best for your finances. Here are a few basics to keep in mind.
Make a budget. If you've heard it once, you've heard it a thousand times, constructing a budget can be your greatest ally when it comes to managing your finances. Those first paychecks may inspire you to make rash spending decisions. Impulse purchases can throw you into debt, which is never a good starting point.
Prioritize. While you're putting together your budget, it's important to prioritize your monthly expenses, and your debt. Bills–rent, utilities, etc–need to go first; those are costs that you cannot avoid. Next come any loans (student, car, etc.) or other debt repayment. For the sake of your credit score, it is crucial that you make your payments on time. And if you have credit card debt, make sure to pay more than the required minimum whenever possible, and always put any extra funds toward paying off the one with the highest interest rate. Consider paying yourself each month one of your necessary financial obligations each month; saving just $20 a month can make a huge difference.
Ensure you're insured. Health, disability and life insurance are often offered through employers, so make sure you're covered for life's "in case" events. Recent health-reform legislation allows you to stay on your parents' health insurance until age 26. After that you're on your own. Make sure you fully understand and are signed up for the insurance policies most beneficial for you.
Look down the road. It may sound ridiculous to be planning your life ten years from now, but having an idea of where you want to be can help you form a plan for your spending and saving today. Do you want to own a home? Get married? Have kids? Your credit score and savings have a tremendous impact on all of these milestones, and you don't want to be looking back thinking, "If I'd only had a financial plan . . ."
A financial professional, like a CPA, can help you get on your feet financially, and plan ahead for life's major milestones. For more great financial tips for when you're just starting out, click here. And for more information highlighting key life events, click here.
Remember to submit your tips for this week's FANtastic Friday Savings Tip! We want to know: With wedding and graduation season ramping up, how do you travel to important events and/or purchase gifts without breaking the bank? Tweet @feedthepig or post on Benjamin's wall.
Visit www.feedthepig.org for more money-saving tips.
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