It’s time to get your finances in order!
Landing your first job when you are done with school is a major milestone. It is also an excellent opportunity to start off on the right financial foot. The actions you take now will impact your financial future.
“Starting your first job is exciting for a number of reasons. You are stepping on the first rung of your career ladder, and you also have the prospect of steady income for the first time. It can seem like a bit of a windfall initially, so the temptation may be to spend, spend, spend,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“You are far better served to have a money management plan in place and to follow it right from the beginning of your career. It’s much easier to set a clear path to your financial goals with smart money habits today then play catch up with your finances down the road.” says Schwartz.
When starting your first job, here are some points to consider:
Set a budget
Your best tool in responsible financial management is to set up a proper budget that will help you spend within your means as well as help you move towards achieving financial goals.
Start by listing in detail your expenses (rent, food, transportation, clothing, entertainment, etc.). How do they factor in compared to your new income? Make sure that you aren’t too stringent with your budgeting, especially if this is your first time at this. Even though your intentions to stick to the plan may be good, if you’ve been too strict it might be hard to live the budget day to day.
Plan to revisit your budget regularly (at least once a quarter) to make sure that you were accurate in your projections. You need to be open to tweaking your budget where it is needed.
Credit is not free money
Now that you’ve got a regular income with a full-time job, you might be eligible for more credit products. Credit is a useful tool in responsible money management to help you establish a good credit history (which is important for when you want to buy larger items, like a car or a house). Resist the urge to take on too many credit cards though. Credit is not meant to help you extend your monthly spending budget. Commit to cash and only charging what you are able to pay off in full every month.
Don’t forget about savings
If you are fresh out of school, there is a good chance that you are carrying student debt. While you may be focusing on aggressively paying that down, don’t neglect savings. What’s more is that you should break your savings down to earmark funds for emergency savings in the short term and for longer term goals (like a down payment for a home and for retirement).
Find out about benefits
With full-time employment, you may be eligible for company-sponsored benefits. You should find out the details of what is covered and include that in your household financial plan. Investigate things like health coverage and savings programs (e.g. pensions, employer matching programs, automatic savings program etc.). It is important you know what you’ve got to work with and then you can fill in the financial gaps.