Well, look at you, landing your first real job. All those years of education and grinding out internships have paid off: now you’re in the big leagues. Congratulations, but as you know, this is where the hard work starts–especially when it comes to managing your financial future. So if you want to know what to do when you get your first job, you’ve come to the right place. This guide features 5 important money hacks for first-time employees so you can start bringing home the big bucks.
Create a budget
You’re making money now, which means it’s time to start acting like an adult. We know, we know. But honestly, it’s worth it in the long run, as you’ll save more money and be responsible with your finances. You’re out in the big wide world now, and while your first job is bringing in some cash, it’s probably not an obscene amount. The average salary for graduates ranges anywhere between $27,000 and $50,000.
That’s why it’s best to start budgeting. Creating a budget (and sticking to it) can help you keep track of what’s coming in and going out every month, so there are no nasty surprises coming your way. And trust us: the last thing you want is to think that all of your monthly spendings is taken care of, only for a last-minute electricity bill to come in and catch you off guard.
Budgeting will also make it easier to save money. So take your monthly income after taxes and student loan contributions and lay it all out on the table. Fixed expenses include things like:
- The rent/mortgage
- Utility bills
- Grocery and shopping expenditure
- Insurance costs, such as life insurance (more on that in a bit)
- Travel costs
- Debts
What you’ve got left is yours to save. Just bear in mind that you’ll want to leave a little aside for, you know, enjoying life. While we won’t encourage going over the top here, don’t forget to have some fun with the odd dinner out, drinks with friends, and general entertainment stuff.
Get on top of your debt
Debt is something nobody wants, but pretty much everyone has. Whether it’s student loans or that credit card you took out and told yourself you’d only use in an emergency (late night tequila is an emergency, right?), now is a good time to get on top of the money you owe.
Come up with a repayment plan by making a list of all your debts, choosing a repayment method, and setting goals to become debt-free. The key is not to be over-optimistic but still ensure a portion of your salary is reserved for debts.
And most importantly, don’t incur more debt. Living beyond your means is a one-way street to more debt accumulation. That Uber ride might be tempting, but if you can take the bus or walk, go for it.
Build an emergency fund and think about your savings
An emergency fund can safeguard you from unexpected financial events and ensure you’re not left out of pocket. It’s easier said than done, but saving at least three months’ wages will put you in good shape should you find yourself in a position where you’re not working anymore or you decide on a career change further down the line.
And if you can manage to save six months’ worth of payslips, you won’t hear us arguing against it. Most importantly, putting something aside for a rainy day is a savvy move–suddenly, your savings pot looks even more impressive.
Look into opening high yield savings accounts or exploring other investment types that could come in handy and allow you to build up a little nest egg as the years go by. The result is a better financial future that can help you reach your financial goals faster.
Understand your employee benefits
Your shiny new job might just come with a handful of employee benefits that can help you save in other areas of life. Most people skim over the benefits section, focusing on other aspects of the employment contract instead. But it might be worth spending a few minutes looking at handy extras involved with your employment.
Things like health plan options, corporate discounts, paid time off, bonuses, and tuition assistance may all be included. You could even get access to group life insurance coverage, which sees your loved ones protected should the worst happen to you.
A group life insurance policy is a handy extra that most young people don’t give much consideration to, but it’s something worth acknowledging. If you do have one at your job, it might still be worth getting an individual policy, which can really come in handy.
How?
We’ve got that covered in the next section.
Get a life insurance policy
Life insurance? At such a young age? Surely something isn’t adding up here? Actually, young and enthusiastic job-lander, if you’re wondering what to do when you get your first gig, taking out permanent insurance coverage should be high up on your list.
A permanent policy gives you benefits while you’re still alive, such as wealth accumulation, and isn’t just related to when you pass away. All of a sudden, a life insurance policy becomes a form of savings account that lets you build for your future and retirement.
Also, life insurance policies at a young age are cheaper than if you get one in your forties because you’re likely to be at your healthiest point in life. And a permanent policy comes with premiums that don’t increase. That means you’ll pay the same at 25 as you would 35, 45, 55… well, you get the picture.
Getting life insurance gives you a death benefit to leave to your beneficiaries so you can protect those you love should the worst happen. But it also has a cash-value element that lets you build wealth while you’re still alive.
When you take out perm coverage, you essentially pay into two components: the death benefit and cash value. Both of these grow simultaneously, and you can access the cash value later in life and spend it on whatever you wish.
To you, that could involve clearing debts, sending your kids to college, funding your retirement plan, or simply buying yourself something nice. And best of all, the money you withdraw is tax-free.
When you take out the money accrued, you can do so via a 0% loan to yourself. And because you can’t pay yourself tax, there’s no need to give anything to the IRS. When you do pass away, the death benefit repays the loan, with the rest going to your beneficiary.
A permanent life insurance policy is a smart way to save for the future while safeguarding those you love. And if you get a policy in your younger years, not only will the premiums be cheaper, but you’ll have longer to build your wealth.
In conclusion: What to do when you get your first job
There’s no need to worry about what to do when you get your first job because our tips have got you covered. Being smart with your money can set you up later in life while making sure you don’t run into any problems in the present. So create that monthly budget, build an emergency fund and get permanent life insurance as you hack your way to the top with smart money moves.