4 money moves for starting out
You got the job! Congratulations! Hopefully it brings you meaningful work as well as providing for what you need. Now in addition to starting a new job and maybe even a new life, you need to manage your own money. eek. Why didn’t they teach this in school?
Let’s acknowledge that mistakes are normal. Any successful person, if they’re honest, will admit that there are ways they could have spent or saved differently. Perfection is not the intention. But taking a few steps in the right direction, and doing them early, can pay dividends in financial confidence. The mental rewards may appear sooner than you think!
Here are 4 of the best money moves you can make to start.
Understand your pay
The actual amount of your paycheck may be less than you were expecting, after the normal federal and state withholdings. Don’t panic! The paystub you receive with each deposit details each one of these. See here for a short rundown.
Open retirement accounts and invest
Retirement? The idea of being 65 may seem unreal, a ludicrous speculation. But it’s probably easier to imagine just a few years down the road. POV: You just turned 30. It’s a Tuesday morning and you’re looking at your net worth. Your investments have grown, your debts have shrunk, and you’re feeling confident about whatever you’re doing next. This is a good day.
How do you get there? Start early and let the magic of compounding do the work. Check our calculator for a realistic estimate of potential returns. These results are achievable with a 401(k), if that’s provided by your employer, or a Roth IRA, which is a great option for young people who have time to see their investments grow.
Critical: Getting started with retirement accounts is a two-step process. Contributing is the first and choosing investments is the second. Your money won’t grow unless you take the second step! The financial institution you sign up with can help you choose a diversified portfolio, which is just a collection of investments across many different companies and industries.
Build credit
Credit is important, but maybe not for the reason you think. A credit score is not a measure of your worth or financial success. However, having good credit early on will give you more options in the future, by making you eligible for better rates on every type of loan. The easiest way to start building credit is to get a credit card, use it to pay for the same things you would ordinarily buy, and then pay it off entirely, consistently, every single month.
Track your expenses
It’s surprising (shocking) how many grown adults say, matter-of-factly, that they have no idea where their money is going. Ignoring expenses might be common, but it’s not normal! It’s much easier to cover your needs as well as your wants if you know what’s happening with your money day to day.
Brightfin can help here. Our simple, user-friendly app shows all of your transactions. Just swipe each one to categorize between Spend, Splurge, Save, and Share. See the results as percentages and align them to the priorities you choose. Brightfin does all the math, no spreadsheets required. Get it on the App Store and start swiping today!
Photo by Nathan Dumlao on Unsplash