It’s official, you no longer have a job. You now have a career. Congratulations!
You have your entire future in front of you. You may not stay in this role or with this company forever, but you can start setting yourself up for the best possible tomorrow and future financial success.
How do you do that? How do you avoid the financial pitfalls and mistakes that many young people make after they leave college? It’s all about building a system right now, so it’s easy to follow and sustain. Starting out with the right financial habits today may help make them second nature for tomorrow.
Here are a few things you should do after landing your first big job.
1. Build a Reasonable Work Wardrobe
The days of wearing your sweats to class are sadly over. Depending on your job, you may have to look professional every weekday. However, you can still find ways to look professional on a budget.
Overspending on work clothing is a financial mistake that young people sometimes make. They may swing for the fences on their first work wardrobe shopping trip, while digging themselves a financial hole while doing so. But it doesn’t have to be that way.
Here are a few rules of thumb to follow:
Explore Different Options
You may want to avoid buying anything at a department store for a non-sale price. The money you spend on a full price big-brand blazer could go much further if you use it strategically somewhere else. If you’re going to a department store, you may want to go as a bargain hunter. Focus on sale, reduced, and clearance items.
You may be able to stretch your dollar further by shopping online. You’ll want to become familiar with websites like:
- HauteLook: Great flash sales, but pay attention to the return policy
- RetailMeNot.com: Big saving with retail coupons
- Shop It To Me: Get notified of great deals with this newsletter
- Amazon’s 70% Section: This is simply great to look at for all kinds of goods
Keep it Simple
You may get far more value by building a wardrobe made up of stylish staples that you can mix and match with ease.
Be wary of getting something that is a bit flashier and harder to mix and re-purpose. You run the risk of loving it for a while, but eventually demoting it to the back of the closet. Everything in your closet should be in regular rotation.
This keeps things versatile and flexible, and can also make the process of getting dressed and out the door in the morning less stressful.
You may want to build what is called a ‘capsule work wardrobe’, which is full of versatile staples that you can use to dress up (or dress down) to the degree you like. You can click the following links to see examples of a professional men’s capsule wardrobe and a professional women’s capsule wardrobe.
Of course, these are just examples and your own personal taste will dictate what you consider a staple.
Look at Thrift Shops and Secondhand Stores
Even if the idea of this doesn’t immediately appeal to you, we invite you to try this at least once.
You may be pleasantly surprised at the quality of items you can get and the low prices you’ll pay. All it takes is one amazing buy, and you may find yourself hooked and coming back for more treasure hunting.
These vintage and classic clothes are also a good way to inexpensively add some retro chic looks to your wardrobe.
2. Figure Out Your Financial Budget and Cash Flow
Too many people will only start working with a budget in response to trying to curb their overspending habits. However, there is no need to wait until some damage has already been done to start budgeting. You can start budgeting right from the very start of your career and make financial success a habit.
There are lots of free templates online for you to set up your first budget. There are also plenty of free budgeting apps available, so you can track your spending progress while you’re on the go.
You can’t live within your means if you don’t know exactly what those means are. Creating an honest financial budget right now may give you a better idea of what you can afford to spend. For example, maybe you have a budget of $100 a week set aside for entertainment, and a $40 dinner out with friends on a Monday has already cut you down to $60. This means you may want to be mindful of your spending on entertainment for the rest of the week, which may mean having a quiet week and staying in on the weekend.
3. Establish a Financial Safety Net
Even the most diligent budgeting can be derailed by life’s unexpected emergencies. Let’s say you have that $100 we mentioned above for entertainment and discretionary spending, but you’re suddenly faced with $400 in car repairs that you need to make or you can’t get to work.
Almost 40 percent of Americans said they would have a lot of trouble finding an extra $400 for a financial emergency. This can be especially difficult when you’re just starting out in the workforce and you haven’t had the chance to save a lot of money.
In these situations, it may make sense to have a line of credit as a financial safety net. If you find yourself with an emergency expense and you don’t have the savings to cover it, you may consider getting something like a CreditFresh Line of Credit by CBW Bank. Requesting a line of credit from $500 - $2,500 is quick and simple. This line of credit may provide the financial safety net you need if you find yourself in an emergency situation.
Another way to ease the burden may be to get medical or home insurance for certain emergency expenses, such as medical and house repair expenses. If your new job doesn’t come with a comprehensive insurance package, you may want to make some space in your budget to pay for insurance.
However, if your job does provide benefits – like medical insurance, life insurance, and retirement contributions – make sure you use them. An alarming number of Americans are basically leaving money on the table when it comes to their benefits package. In fact, roughly 3 out of 10 employees surveyed say they’re not confident that they’re getting the most from their workplace benefits. If this is your first job with benefits, you may not know how to use them, but it’s in your best interest to find out.
4. Set Goals for Your Savings
What do you want your future to look like? Now may be a great time to set financial goals so you can start working to make them a reality as soon as possible.
Perhaps you want to start saving for a house, a wedding, a car, or a trip. Regardless of what your financial goals are, you need to start identifying exactly what you want and define what financial success means to you.
You may want to consider having a comfortable amount of money auto-withdrawn from your checking account directly into a savings account of some sort. This may make it easier to save. If you’re depositing the money manually and frequently handling it, you might be more tempted to use it on something other than your savings. But if it’s auto-withdrawn, it may make it easier to include in your budget without the temptation to spend it.
Otherwise, you might find yourself only saving whatever is left over at the end of the month or the end of the pay period. And if money isn’t accounted for, it can disappear without you noticing.
5. Start Using Credit Wisely
Whether you have a line of credit or a credit card, you want to be tactful and strategic in how you use revolving credit.
The right credit usage may help you build your credit history, which may put you in a better position to afford the house or vehicle you want in the future. Bad credit usage may hurt your credit early in life and possibly force you to delay your financial goals because you might be paying higher interest rates as a result.
You may be tempted to make a purchase with your credit card without having the money to pay off your purchase right away. But other unforeseen financial needs may pop up, and the money you thought you’d be using to pay of your credit card now needs to go to something pressing. That’s why it’s important learn to say “no” when you want to purchase something with your credit card without having the funds to pay it off immediately.
At the same time, getting credit and never using it may not be the most productive way to use your credit either. Unused or inactive credit may not hurt your credit, but you may be missing out on an opportunity to build your credit history.
- Payment history: How often you’re paying your bills on time
- Credit utilization: How much of your available balance you’re using
These are just two of the many factors that make up your credit score. Just remember that when you use credit, make sure you’re paying that balance down right away. Failure to do so may potentially hurt your credit score.
6. Begin Your Retirement Savings
No, it is not too soon to start saving for retirement. Anything you can put away today can help you down the line.
At this age, this may be a bit of an abstract thought. Even if your new employer offers some sort of workplace retirement plan or employer-provided 401(k), it may not interest you right away. You may not intend to stay with this same company for the rest of your life.
However, retirement savings should always be on your radar and part of your financial goals. If you’re going to look to save outside of workplace plans, two common options are:
- An IRA
- A Roth IRA
To help you understand the differences between these two options, check out this article.
These are only a few of the good financial and saving habits that you can build in the early years of your career. The earlier in your life you can incorporate good habits, the easier it may be to make them a way of life. The longer you keep a bad habit in your life, the harder it is to break the habit down the line.
Don’t think of budgeting and saving as cutting out the fun things in your life. Think of it as making sure that you have a chance at still being able to afford them tomorrow.
Looking for a Financial Safety Net?
As we stated earlier, a revolving line of credit may be a helpful safety net for unplanned expenses.
A CreditFresh Line of Credit by CBW Bank from $500 - $2,500 may be able to act as a safety net. Requesting a CreditFresh Line of Credit will not negatively impact your credit score. The process is simple, quick, and completely transparent, with clear terms and no unexpected or hidden fees. Click here to get started!
Posted in: Lifestyle