As young professionals enter the workforce, many might be financially clueless when it comes to saving money and preparing for the future. A new job offers endless opportunities from selecting RRSP options to tax withholding.
To help young professionals get started, here are a few tips to help begin the savings process.
While most individuals open a saving or checking account prior to graduating high school, many do not. Aside from a RRSP and other saving accounts, open a separate account to begin stashing away for the future. Perhaps this money will serve a purpose like help buy a car or use for a down payment for a first home. Have a goal in mind so that you’re able to turn a “want” into reality. Perhaps this savings account will help pay off any student loans. Whatever the desired savings account is used for, make sure to save realistically. For example, setting aside less than $100 a week will quickly add up. If you think this amount is too much, consider how much lunch and coffee runs cost you as you might find both add up quickly to more or less the same amount.
It is impossible to prepare a good budget and stay within spending limits if a budget is not implemented. Working a full time job has highs and lows with receiving a paycheck ranking pretty high up. Using programs like Excel or creating a free bank account online on Mint.com, young professionals can begin creating a realistic budget dividing “must have” items like rent, bills and food verses “wants” like new clothes, dinners out and entertainment. Creating a budget is helpful to track any and all spending to view how much is absolutely spent in order to avoid dipping into the negative. Your budget may also include future savings such as retirement and emergency funds.
Credit Card Caution
Once a budget is in place, now it the time to figure out how to pay for items. If a credit card is in question, make sure to consider APR rates and research awards and benefits to you. Prior to selecting a credit card, consider a free credit report to determine what percent tile you land to help determine which card is best suitable for you. If you’re in the early stages of building credit, credit cards help create and increase a fantastic credit report. However, make sure to watch spending limits as the amount spent is due monthly. Carrying over hefty credit card bills might cause problems later down the road.
In The Know
Family and friends are great influences but maybe not necessarily all the time. If deciding upon what financial budget is right for you and want an industry professional opinion or additional insight to how to go about saving money properly, consider reading financial publications covering important financial topics such as: Forbes, Fortune, MoneySense Magazine, Fast Company, The Economist and Wire. Taking time to speak with a financial planner or adviser is highly beneficial to discuss and smooth out any uncertainties one may face while determining a financial plan.
Planning for your future as a young adult might seem overwhelming and a bit intimidating so take some time to focus and think what it is you want tomorrow, today. Being able to track expenses and budget wisely keeps you in financial shape for months and hopefully years to come.
Lora is an avid traveler and writer covering financial and law topics for young adults and those early into the financial planning stage of life.