The U.S. economy continues to show signs of positive growth.
The June jobs report from the Bureau of Labor Statistics revealed the economy added 223,000 jobs and the unemployment rate fell to 5.3 percent. This news comes after the May jobs report was rather lackluster and put a damper on some built-up excitement.
As The New York Times summed up the numbers, "Not too hot, not too cold."
These numbers bode well for recent college graduates, especially those who just finished their education in May. Slowly but surely, more and more companies are hiring recent students. According to the National Association of Colleges and Employers, companies plan to hire 9.6 percent more new graduates from the 2015 class, compared to 2014. In fact, this total has steadily increased since 2013.
As a result, more young employees are, for the first time in their lives, bringing home consistent paychecks. It may be tempting for them to spend right away, and understandably so. Arguably one of the greatest feelings - after spending years in school - is to see that first paycheck. However, young employees should temper that excitement and look into setting aside some money from every paycheck. They may not realize it, but proper saving habits will help them in life.
Detail your spending
It isn't until you get that paycheck and look at it that you realize just how many bills you have. There are a few categories that you should identify as extremely important so you can get an idea of how your check is divided after taxes and 401k benefits are automatically taken off. If you have already moved out of your parents' house, the most important areas money should go to are rent, food and utilities. Every month, those should be your first priorities. Then, examine everything else: Do you have a car payment and credit card bills? Do you need to cover your transportation expenses to and from work?
A good rule of thumb for any person is to create an emergency fund. As its name implies, this money is to only be used in emergencies, such as sudden unemployment, emergency health situations and automobile accidents.
A good rule of thumb is to create an emergency fund that can help you for three months. If you have a family or your income varies on a consistent basis, your emergency fund should ideally last you six months. According to Business Insider, it's difficult to put a dollar value on these funds because everyone has different living habits. For instance, someone may not need a large fund if they don't have a car. At some point, you should treat the monthly contribution to this fund as a regular bill.
Look toward a dedicated savings account
Young employees should open a savings account for monthly deposits. NerdWallet says this type of account is the easiest way to save money. Anything deposited will be stored in a secure, FDIC-insured location and earn monthly interest. They are designed so you can't easily make withdraws, as the Federal Reserve Board has regulations in place limiting transfers and withdrawals to six per month.
For recent college grads who have just entered the working world, it's important to understand the various ways to start saving money. Young employees never know when an emergency will occur, and the sooner they understand good saving habits, the more financially secure they'll be down the line.
For more information about smart ways to manage your finances, contact Landmark Bank.
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