You did it! You’ve landed your first full-time job, now what? Starting this new chapter in your life is an exciting and educational experience, but you shouldn’t feel like you have to go it alone. Truth be told, many of us are unsure of how the 9-5 lifestyle works until we jump in and try it out for ourselves!
One of the most challenging avenues to navigate after you’ve been hired on full-time is figuring out how to handle your finances. Especially if you are now working from home full-time, you’ll have even more time on your hands to invest back into yourself. In many cases, a full-time job indicates more money, better benefits, and greater perks, but without good money management skills, you probably won’t be able to maximize this newfound level of security.
Not to worry, first-time full-timers, we’ve got you covered. In this post, we’re sharing some tips to help you get a jumpstart on your finances in this new chapter.
1. Build a budget
After you’ve celebrated your career-related accomplishments, it’s time to build your budget. Whether or not you’ve budgeted before, this change in course and income marks the perfect time to reflect on your finances and start crunching the numbers.
Here’s how you can lay the groundwork for a basic budget:
- Add up your total income after taxes
- Subtract your fixed expenses, such as your rent, utilities, loans, etc.
- Estimate and subtract your variable expenses, like your groceries, gas, and entertainment costs
- Identify your financial goals
2. Set up a savings
This step may seem pretty basic, but you’d be surprised how few people are actively saving. In fact, in a 2019 survey, GoBankingRates found that nearly 70% of Americans have less than $1,000 in their savings.
If your new 40 hour per week position is the first time you’ve felt empowered or able to stash away some savings, go for it! Having some extra cash on-hand creates a financial security net in case you incur health expenses, need to make vehicle repairs, want to move apartments, or want to treat yourself to that trip you’ve been dreaming about.
To make the most of your efforts, you might consider money in a high-yield savings account, like a CD. These accounts allow you to store your funds securely, while simultaneously earning compounded interest over time. Keep in mind, these accounts caveats that may make it hard to access your cash before the maturity date or may require fees to conduct transactions. Whenever you’re making a financial decision for yourself, be sure to consider how the potential pros and cons may affect your financial wellness.
3. Build your credit
Your credit score is one of those things that, no matter how much you try to reject it, seems to define you in some capacity. A good credit score opens the door for new possibilities, like securing a mortgage, getting a low-interest rate loan, and being approved for the rental of your dreams. Conversely, having a low score can be incredibly limiting for many people.
But boosting your credit score isn’t an overnight kind of deal — it can take years to establish good credit or recover from a drop. With a new career and heightened focus on your finances, there’s no better time to take action.
Here are a few steps you can take to get started:
- Apply for a secured credit card
- Put some bills in your name and set up auto-pay to make sure you don’t miss a payment
- Ask a trustworthy, responsible relative to co-sign on your credit card account if you don’t have enough credit established
4. Begin planning for retirement
It might feel a little premature to start planning ahead for your retirement, but your first full-time job presents a great opportunity for you to do so! With a more consistent stream of income coming in, you may have a little extra room in your budget to set aside for the future.
But how much should you be saving up? According to Investopedia, the average amount Americans say they need in order to retire is approximately $1.7 million. Now, this sounds like a lot of money upfront, but the earlier you start saving, the better. What’s more, some employers will even match employee 401k contributions which can be a great way to fortify your financial future.
There are many types of retirement accounts to choose from, including:
- Roth 401k
- Roth IRA
- SIMPLE IRA
Each of these accounts has their own pros and cons to consider before signing up.
5. Leverage job benefits
Another way you may be able to maximize the benefits of your new full-time gig is by taking advantage of the different programs they offer. Enrolling in healthcare can save you tons of money paying out of pocket for health services; health savings accounts (HSAs) offer a way to save on taxes when you use funds to cover healthcare expenses. If you’re unsure about how these programs work, or how they may benefit you, just check in with your organization’s Human Resources representative.
6. Consider investing
Investing is another great option to help you grow your savings, especially when you have a little extra discretionary income to work with. Thanks to the growth of the fintech (financial technology) industry, there are many user-friendly options for beginners to start investing. One of the most popular options is robo-advisors.
Robo-advisors give investors a digital platform where they can invest money, tailor their financial goals, assess their risk tolerance, and allow an algorithm to handle the rest. Additionally, robo-advisors are considered to be a more affordable and flexible option than other investment avenues.
Some popular robo-advisors are:
Starting out in a new job is always a great time to learn; and your first full-time position is especially valuable in this process. As you’re figuring out the 9-5 lifestyle, consider what steps you can take to set yourself up for the future and make the most of your incoming paychecks.
Which of these financial moves do you plan to implement this year? Open up the discussion in the comments below.
Sophie Sirois is a writer based in sunny San Diego, CA, currently writing content for 365businesstips.com. With her Bachelor’s of Art in Strategic Communication behind her, Sophie began working in the content marketing sphere and has been crafting unique, informative, and click-worthy content ever since. Sophie enjoys covering a variety of topics, including tech, finance, business, marketing, wellness, and culture.