As a recent college grad starting your first job, you might be excitedly thinking about all the things you can do and buy with your salary and increased cash flow. Before you go all out on a spending spree, take the time to consider securing and stabilizing your finances during this period. You have a lot of your career ahead of you and being considered in how you spend now means more freedom and flexibility later.

Here are five steps you can take to secure your financial future at the beginning of your career:

Live with your family or friends

You have your first job. Your first paycheck is going to come in soon. You’ll have enough to move out and get your own apartment. Awesome, right? Maybe. But that first apartment can make a giant dent in your finances. If you can, consider spending six months to a year getting your bearings by living with parents or other relatives. That money you would otherwise use for rent can be saved and give your disposable income a boost.

If you can’t live at home, rooming with as many friends as possible is the next best thing. You’ll get that solo apartment you always wanted when your salary and savings account give you the flexibility. Living with others lets you start stabilizing your finances and gives you extra bar money.

You’ll thank yourself in year two when others are still living paycheck to paycheck and you’re able to eat out often without much concern.

Start paying your college loans

If you’re like the many students who graduate with thousands or hundreds of thousands of dollars in college loans, you’ll soon feel the pressure of those monthly payments.

Don’t get behind and don’t defer. Do pay off your loans. Pay every month, on time, and set up an automatic debit if it’s available. The nice thing about automatic debit is that you don’t have to worry about forgetting to submit your payment. Further, some repayment systems actually decrease your interest rates if you set up autopay.

While options to defer payments may be tempting as you’re just starting your career, they’re deceivingly bad for your financial situation long-term. You should avoid deferral unless it’s absolutely necessary. The longer you wait, the more you’ll be paying off in interest and the less your monthly payments will impact the principal amount of the loan. Start paying when you can and future you will feel a considerable amount of financial stability later in life.

Finally, if you’re able and feel particularly in a rush to pay off your loans in larger chunks, make sure you do it the right way. Make sure that the lending party deducts your payment from the principal of the loan so that your interest accrues in lesser amounts. That way, you begin paying off the actual loan rather than the interest it has collected.

Start a savings account

The most effective way to prepare for the unexpected - job loss, injury, etc. - is to save up for it ahead of time. Anything that may take you out of the workforce for an extended period of time or any sort of unexpected emergency expense can put a huge strain on your finances. Individuals who are suffering financial hardship also find it difficult to lead an effective job search. Don’t let this to be you. Put yourself in a position to always have financial runway after you quit or lose a job.

Prepare for any situation by creating an emergency savings account. Add money to the account every month to the best of your ability with the goal to save up six to twelve months of potential expenses (this might take some time -- that’s okay! Keep saving). Add up all your spending over the course of a month, multiply by six or twelve months, and use the resulting number as your guideline for how much you need to save. That way, should the unexpected strike, you’ll be fully prepared to dive right into a new job search or extended period of absence.


Start a budgeting habit

There’s no better way to start putting your financial affairs in order than by creating a budget. It will let you to know exactly how much money you can spend on yourself while at the same time putting aside what is necessary for bills, loans, and necessities. List all of your regular monthly payments and the amount you spend on food and other essential living expenses. Categorize them, add up the figures, and see how much you’re left with at the end of the month. Then, take a portion of that and put it into savings. The rest of the money will be your personal spending allowance.

If you’re not sure how much you want to spend each month on personal things like going out, going to concerts, getting drinks, etc., spend a month without putting any of the leftover money into savings, and see how much you’ve spent. Keep track of all your receipts and add up the money you spend in various categories. If you find yourself spending too much, you know you’ll have to find areas to cut back on. If you’re spending is light, that gives you a bit more wiggle room to add to either your savings or your allowance budget.

Figure out your benefits

One of the most overlooked aspects of employment by young professionals is figuring out the benefits that are available to them through their employer. Sure, you’re 22 years old and just starting your first job. That’s no reason to forego health or retirement planning. People that start early - at the very beginning of their career - won’t have panicked and frantic moments later in their lives when they realize they haven’t utilized wellness programs or saved enough to retire.

Figure out the full suite of benefits available to you through work. If you’re not sure where to look for this information, find your human resources representative. It’s their duty to get you all the information you need and guide you through enrolling for the appropriate programs. If you can, stay on a parent’s health insurance as long as possible to avoid incurring the extra payments. Determine how much you want to contribute to your retirement fund. Learn about terms like 401k, IRA, Roth, etc. All these things may not matter much now, but they’ll matter a whole lot later.

Put your financial future in your hands. Tackling your finances is easier now, when you’re just starting out and expenses are straightforward. Even putting it off this sort of consideration for one year can have you lose out on a lot of the benefits that come with saving and spending the right way and right away.

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