Beginners budget if you’re new to the working world.
Learning to budget isn’t easy – but it is an essential skill to master if you want to successfully transition from a college student to a full-time employee. While studying you may have had to cover and budget for student loan repayments and meal plan spending but when you make it to the ‘big’ world there is a whole lot of unforeseen bills you’ll need to pay – and the more prepared you are for what’s install for you financially the less stressed you’ll feel.
If you’re taking your first steps into the working world, consider the following tips to help you budget your new salary.
Understanding Your Company Benefits
The nice thing about new jobs is that most of them come with benefits. This is either explained to you during your interview process or it is stipulated in your contract. However, if you are unsure if you qualify for any benefits, what they are and how to receive them then set up a time to meet your company’s HR manager to go over them again.
Knowing what your benefits are and how to take advantages of them can help you reduce your taxable income as well as your additional savings. They will help you create a more accurate budget for yourself as you are able to determine what costs your company is willing to cover.
The biggest mistake many graduates make when they enter the ‘adult world’ is to completely ignore their spending habits. You need to be able to calculate and track your spending, so you never have to wonder where all your money is going.
However, you find it best to monitor or track your financial habits whether you want to use an app, a list or an even a spreadsheet. The most important thing is to go through your monthly spending habits and compare it to your actual income. You might not know how much you spend monthly which is fine but make it a priority to make sure after your first month you are tracking how much you spend and adding up your fixed monthly expenses.
To begin list all your monthly income. Whether it is from one sole source of income, babysitting, freelance work or your new side hustle – list and track them all. The next step is to add up your monthly expenses, such as your rent, car insurance, utility bills, grocery spending, and student loans. As well as expenses on entertainment and social activities.
The next step is then to subtract your expenses from your income. You’ll either get a positive number, a negative number or you’ll break even. If it is not a positive number, you need to adjust your budget by decreasing your monthly expenses.
Keep Costs Low
As you adjust to the real world, you will realize there are a lot of new monthly bills you’ll have to pay. Usually, your largest monthly cost will likely be your rent. You want to keep your costs as low as possible you can I the beginning of your work journey.
We live in a world of infinite monthly subscriptions option; Showmax, Spotify, Netflix etc. If you’re not careful they can quickly accumulate to an excessive amount of money if you’re not smart about it. Consider cutting back on your monthly subscription services to bring down those monthly expenses and even save a little.
When it comes to budgeting you need to consider your discretionary expenses -expenses on social events, travelling, and entertainment. This is the spending you really need to keep your eye on, otherwise, your budget isn’t going to work. While it’s nice to be able to afford the things, you like now that you’re working – you should be cautious about making big purchases just because you can – because you won’t be able for long. You want to avoid starting bad spending habit and keep your budget on track.
Saving – Duh
One of everybody’s favourite finances rule is saving. The rule of thumb is to set aside at least 10 percent of your paycheck for your savings account. Starting this habit early is good practice for the future because you never know what the future will hold. Having a solid savings account in place will put your mind at ease if you hit any financial hurdles in the future.