New to the Workforce? Here Are 3 Tips for Budgeting a Paycheck
Congratulations! You entered the workforce and have now received your first paycheck. Earning income may be new to you, so it’s important to sit back and consider what you want to do with it. Below are a few tips for budgeting a paycheck that will help you enjoy the fruits of your labor while still saving and planning for the years ahead.
Tips for budgeting your first paycheck
1. Save, save, save
Put away money for a big purchase later down the line or for a rainy day. For the latter, these funds can be used in the event of the unexpected, such as an unforeseen illness or injury resulting in sizeable medical bills. If you’re unsure where to start, 20% of your post-tax income is a good rule of thumb to save. If this amount stretches your budget too thin, consider starting out at 10% and increasing the percentage over time. Even saving a little will make a big impact.
While it’s wise to save, you can’t squirrel all your paycheck away in a savings account. There are other obligations to satisfy, including any outstanding debt you may have. Whether this is student loan or credit card debt, you can start slowly chipping away at these balances each month. Focus on high-interest debt first, as these are more likely to snowball over time.
Tip: Visualizing your debt payoff strategy is easy with Money Management. This online tool consolidates all your debt into one hub and shows you techniques for paying it off quicker.
3. Treat yourself
After satisfying necessities like rent and reviewing your budget, you should consider rewarding yourself! After all, you did put in a lot of hard work to earn that first paycheck. Brainstorm what would be realistic for you and remember it doesn’t have to be extravagant. Even a new work bag or a special purchase at the grocery store (ice cream is always a great way to celebrate!) can help you ring in this new stage of life.
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