When you’re just starting out on your career path, long-term financial planning and security might not be the first thing on your mind. Paying rent and living expenses, whittling down student loans, being financially independent—those are the kinds of things at the top of the priority list. Thinking beyond that can be a major challenge, even after you score a full-time job and can start thinking about more financial stability.
Why worry about this now? After all, you’re young and possibly just getting your career feet under you. Plenty of time until you need to worry about things like 401(k)s and buying real estate, right? The reality is that the better you set yourself up financially now, in terms of habits and nest eggs, the better off you’ll be later. It’s boring, but true. Life is pretty unpredictable. You can’t really take for granted that there will be plenty of time to settle things later. And starting some best practices now can help insulate you a little if your finances some rough patches (like job loss, personal life changes, or other big shifts).
According to a survey done by personal finance app Acorns, about half of millennials surveyed felt like they were “treading water” financially. That doesn’t have to be you…if you’re in the happy position of having a stable, full-time gig, now is the perfect time to start thinking and planning and seizing control of your finances.
There are things you can (and should!) be doing, even if you’re just starting out in your career. Let’s look at 10 ways on how to get your finances in order, and set yourself up years down the road.
1. Create a budget.
A budget is the key to financial health—there’s no way around it. If you don’t keep track of where your money’s going and where it should be going, it won’t take much for spending to get out of control. And it’s important to make it realistic…if you know you won’t be able to quit your Starbucks habit, build it in and make sure it balances out with your other spending.
You don’t have to deprive yourself of everything that doesn’t fall in the housing/food/utilities/life basics/car payment realm…you just need to be up front with yourself about how your spending works, and what you can afford to spend on things that aren’t life-or-death. (I know, sometimes that latte feels like life-or-death.)
For more on building a budget, OnlineCollege.org has some great budgeting advice for the personal finance newbie:
2. Do your research.
If you’re like me, the idea of money and personal finance might stress you out. My historical method (which is unequivocally not recommended) was to avoid dealing with any of it directly, which was a very dangerous game.
If you’re not realistic about your debt and your options for dealing with debt and expenses on an ongoing basis, you risk falling into unfortunate (and credit-damaging) habits. So my recommendation to you is this: be informed! You’re already looking for information here, which is great, but there’s a whole wide world of personal financial info out there to make you a more savvy saver, investor, and spender. Here are some handy books to get started:
- Smart is the New Rich: Money Guide for Millenials, by Christine Romans
- Why Didn’t They Teach Me This in School?: 99 Personal Money Management Principles to Live By, by Cary Siegel
- Personal Finance for Dummies
- Simple Money: A No-Nonsense Guide to Personal Finance, by Tim Maurer
And some helpful web resources as well:
3. Earn more, save more.
When you get a raise, it’s super exciting—especially thinking about what you’re going to buy. But when you get the good news, also think about how you’re going to bump up your savings accordingly. If you work in that increased as soon as you get your raise, it’s easier to make the bigger chunk feel status quo.
4. Beware of sandtraps (expensive habits).
Things like going out with friends can make your expenses snowball. When you’re out and about, it’s so easy to lose track of what you’re spending and where—you’re having a good time! Plenty of time to worry about cash flow later, right? If you’re planning to go out, or have regular nights out, make sure you work this into your budget for the week/month, so that you don’t find yourself scrambling to cover other things when the credit card payment comes due.
5. Know the score.
Your credit score, to be exact. This can give you a baseline for your personal financial planning. If you have some work to do to get it up to snuff, this can help you work damage control into your budget. If you already have a healthy credit score, that’s great! You can work toward maintaining that—or even making it better.
6. Think about your goals.
Do you want to buy a house or condo in five years? Are you thinking about settling down and starting a family with that special someone in the near-ish future? When working out your personal finances, your long-term goals are super important. The sooner you can start setting aside savings for these priorities, the more seamlessly it becomes part of your financial routine.
If you’re the crafty type (or just need a visual reminder of your goals), consider building a financial vision board. Putting your goals down in one spot can make it easier to keep those priorities front and center in your head.
7. Learn the art of the deal.
Negotiation isn’t just for billionaire presidential candidates…it‘s also a tool that will serve you well at every step of your career. Having the first real job is great, but it’s also a starting point. Even if you stay in the job for a long time, you should take advantage of negotiation to increase your pay and benefits. This has multiple benefits for you: not only do you (hopefully) get more money, but you also build your professional confidence. You don’t have to be Donald Drumpf, you just need to be your own best advocate.
8. Get a “money buddy.”
This doesn’t mean you need to share your hard-earned cash with your friends (unless you’re feeling generous and want to pick up that bar tab)…rather, you should pick a friend or relative that has good financial habits, and talk openly about your personal finance goals and challenges. Studies show that good money habits rub off on close friends, so if you find yourself struggling with your budget while your friend always seems to have her expenses covered and accounted for, pick that friend as your money buddy.
Having another perspective can also help you make better decisions. For example, if you and your friend are both trying to be more budget-conscious about lunches, you can make plans to eat your brown bag lunches together instead of going out and getting expensive sandwiches down the street. Solidarity is key!
9. Consider going cash-only.
Credit cards are convenient, and very handy in a pinch when you need to cover a large expense immediately. However, they’re also kind of the devil. “Charge it,” they whisper from your wallet. “Buy it now, don’t think about it until later. Live beyond your means, friend!” And that’s how credit card debt inflates like those big yard decorations at Christmas.
To avoid temptation and increase financial accountability, consider paying cash (or debit) for everything. That way, your credit card balances stay intact for emergencies, and you’re less likely to overspend.
10. Pay down your student debt.
If you took out loans to cover school tuition and costs, you’re certainly not alone. Seventy percent of grads carry loans, owing an average of $31,172. At this point, student loans are a trillion (trillion!) dollar industry. It’s a common issue that is becoming a unifying financial force for millenials: just about everyone starts out their professional life these days with a blank experience slate but a very full financial one.
And even though the idea of taking your hard-earned money and scrimping on other parts of your life just to send checks into the void can be a tough one, it’s an important commitment to make. If you can’t afford huge payments, work with your lender to set up payment plans. It’s so important to future you to keep chipping away at the behemoth as best you can.
Tools to Get You on Track
Good news: there’s an app for that! Many, to be specific. If you’re looking to take—and keep—control of your finances, you can manage the process from your phone or tablet as easily as you can check email.
- Mint – Provided by financial management company extraordinaire Intuit, this is a site that helps you track, manage, and plan your finances in one place. It offers a free account, lots of advice on managing money, investing, etc., and a mobile app for iOS, Android, and Windows.
- Budget Simple – If you need help building your budget, this web app is a great place to start.
- You Need a Budget – The name makes it pretty clear, no? This software lets you create a budget, and uses its own saving and spending methodologies to help you find ways to meet your financial goals. Also available for iOS and Android.
- Spendee – This mobile app helps you track your spending in real time, and identify areas of concern—and potential savings! Available for iOS and Android.
Once you have the fundamentals down and part of your routine, you’ve already done a lot of the hard work of getting into financial shape. It’s never too early to start planning for “later”—even for retirement. And it doesn’t have to be scary; if you make good money habits part of your daily and weekly routines, you can help avoid (some of) the pinches of Life As an Adult.
Good luck, and happy budgeting!