If you just graduated and have gotten your first serious job, you may think it is quite soon to start being concerned with saving and investing what little money you have. That really couldn’t be farther from the actual truth. Regardless of how you approach at it, the earlier you begin saving your money, the more you’ll have later. Plus, starting to properly handle the money you have now will make make things way better later in life when you are looking for a home or planning for retirement. Initiating prudent financial habits will always bring lasting rewards farther down the road. These initial budgeting plans will hopefully help you secure your financial basics and begin investing in your future.
Expect the unexpected.
As you begin thinking of long-term career goals, make sure that you have already made a strategy in place that will address your immediate situation. In particular that plan should include taking care of any private/federal student loans that you may owe. With loans that carry an interest rate of 5-6% or more, it’s important that you pay off those loans as quickly as possible—especially considering federal loans are often the hardest ones to take care of. The current law makes it very difficult to forgive federal student loans in the event of bankruptcy. Understandably, few people actually prepare for bankruptcy, but one key to a financially secure future is anticipating debt before the rest of your life gets even more complex. The very last thing you want is old debt hanging over your head as you’re getting ready for a family or looking to buy a new home.
On top of paying off your loan debt, it’s necessary to put aside an emergency savings fund. At some point in the near future, you could have unexpected expenses. If you have to shell out the cash for serious surgery or an unexpected car repairs, you’ll thank yourself for having put the funds aside before, and therefore saving yourself from extra.
Identify your future goals.
Most people don’t already have their whole lives mapped out, it’s not unlikely that you have somewhat of a feel for your major interests and priorities. If you intend on seeing the world while you are still young, your saving tendencies will look very different than the goals of someone whose goal is to retire early. Expressing your professional goals will help a person determine how much they need to set aside every paycheck. Others insist that new savers save up to an entire third of their paychecks, with others recommending that saving at minimum 10% is a good way to get into the habit of saving. Whichever amount you decide fits for your budget, be sure to put away something for whatever your ultimate financial goals are (from retiring early, to traveling the world, to having your dream wedding) on a monthly basis so that none of your goals gets forgotten.
The benefit of early saving habits is that you won’t begin to get used to a way of life that becomes too expensive. It’s definitely easier to start lean and build up to a different life than it is to stop using what you used to love.
Frank Stafford currently writes freelance for financial professionals. With a history in business and a degree from SMU, Frank lends practical financial/budgeting advice to his peers across the web. He currently writes for medical professionals, lawyers, and even prominent TBA attorney Joe Garza.
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