You've moved out of your parents' home, you're done with school and you've just been asked to accept your first full-time job. It's very exciting. Your first paycheck should be a moment of celebration, but it also means new responsibilities.
Practicing smart financial decisions from the very start of your adult career will provide you with a more secure future. Good habits are easier to develop if you begin them right away, rather than having to adopt them after suffering from mistakes.
Negotiate your paycheck
Your first financial challenge is obtaining fair salary. First-time job seekers are usually nervous about missing opportunities by appearing too demanding. A Career Builder Compensation Survey found 45 percent of employees accept the initial offer without debate.
One of the best financial habits you can develop is the ability to speak up and ask questions. Time magazine indicated employers expect some degree of negotiation when interviewing with prospective job applicants. As long as you are respectful and confident while vocalizing your needs, you may inquire about the best possible offer the company can make.
Before you step into an employer's office you should jump online and get information about the company and the position. Make sure to research fair starting salaries and benefit packages. Be aware of the economic status of your industry and location. This might be your first time negotiating, but you have access to the experience of others.
Open a checking account
Once employed, the next conversation you need to have is with your local banking expert to find a home for your first paycheck.
You want to open a new checking account or modify an old one. You also need a savings account. When it comes to managing your finances, automation is key. Forbes suggested young professionals directly deposit their paychecks into their local bank. You can dictate how much of your paycheck should be deposited into checking and how much should be sent to savings.
A well-managed bank account will also help you stay on top of your bills. If you have student or auto loans, you can set up accounts for those as well. Most banks have online options allowing you to automatically pay utility bills. By never missing a payment, you create a better credit score.
Get a credit card
You want evidence of your financial responsibility. As soon as you start earning a regular income, you should start building your credit.
Shop around for the credit card that has the best rates for you. Just like your job negotiation, you don't have to take the first option you come across. U.S. News & World Report recommended doing your research, but don't apply for too many cards at once, as this could damage your credit score. You may not need a low interest rate on your first card if you are planning to pay it off every month.
You shouldn't be using your credit card to make big purchases. You want to use the card regularly for small purchases and pay it off every month. Online tools will let you keep track of your payments and spending. Mobile or email alerts can be utilized to prevent identity theft.
"Your first paycheck should be your first step towards retirement."
Plan for retirement
Your first paycheck should be your first step toward retirement. It may seem a little early to plan this far ahead, but your future is important and retirement can be tricky.
While negotiating benefits, find out what your job offers in the way of retirement saving plans. Most companies provide their employees with a 401(k). This is a savings account that will take part of your salary and hold it for your retirement. By investing money into your 401(k), you're saving money on taxes. Some employers will offer company matching options and contribute the same amount to your savings as you do.
Individual retirement accounts provided by brokerage firms are also an option. You can set up automatic payments and purchases for your IRA with your local bank. You want to start saving now - the longer your money is in your retirement accounts, the more interest it will gain.
Create a budget
So you've negotiated your salary, deposited your paycheck, paid your bills and contributed to your savings. Now you're looking to spend your money.
Young professionals have a bad habit of seeing future paychecks as money in the bank. The Chicago Tribune advised first time employees to not spend any extra money in the first three months of their jobs. You want to take some time to actually see how your finances will operate on a weekly basis before you shake them up with a major purchase. Once you get a handle on your new life, you can start planning your next step.
Create a budget that accounts for the financial systems you've set up thus far, and then include goals for future expenditures or life events. Your local banking expert should have information about creating sub-savings accounts for specific needs.
For more information about smart ways to manage your finances, contact Landmark Bank.
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