Editor’s note: We at the Student LoanDownSM are launching a new series of posts aimed at those just starting out in their careers. Look to these posts for tips on handling your money, and managing a lot of the “firsts” that come along as you begin your post-college professional life.
Protecting your paycheck
Beginning your first professional job is an exciting time in your life. And just as it’s important to start out on the right foot professionally by managing your job responsibilities appropriately, it’s key to get off to a good start in managing your new salary.
Invest in a retirement program. As you begin your career, retirement planning may be the furthest thing from your mind. But let’s face it, as exciting as your career may be, you will probably want to stop working at some point. And now is the time to start saving for that day. If your company offers a 401K program or a 403b plan, take a few minutes to learn how it works and whether your company offers matching funds. Then get started saving for retirement right away.
Taking advantage of employee benefits. When you think of employee benefits, you probably think about health insurance. That’s one benefit to take advantage of right away. But many companies offer other types of benefits: they may pay for additional education or training related to your job, they may offer discounts to employees for various things like personal cell phone plans. Read your company’s handbook, pay attention to employee websites and emails, and talk with your manager if you have questions about any employee benefits available to you.
Putting aside savings. If you’re already in the habit of saving money, good for you. Be sure to keep it up and increase it as your salary increases. But chances are that you’re not coming out of college with much money socked away, and you may not even be in the habit of saving. Now is the time to start. Even if you aren’t making all that much money, start automatically diverting some of your paycheck into a savings account. A good goal to shoot for is to have six month’s salary put aside for emergencies. It’s good to start building your cushion of savings immediately—you’ll never miss the money if you put it aside right away. As you start making more money, gradually increase the amount you’re saving. It will get easier as you watch that money build up over time.
Move to online banking and bill-paying. If you aren’t already banking online and paying bills electronically, now is a great time to get started. Online banking allows you to view your accounts all in one place; and automating your bills can help you streamline the process and may help avoid late fees.
Spend wisely. It’s likely that with your first professional salary you’re making more money than you ever have before. It’s natural to want to revel in that a bit and perhaps spend a bit on some things you couldn’t buy as a college student. Just take a cautious approach and wait until you have the money in hand before buying something new. It may be tempting to buy some new furniture on a payment plan, but you’ll be better off if you take a deep breath and save up for it instead.