5 Financial Habits to Start With Your First Job
The habits you pick up when you're young are the ones that will follow you throughout your life. When you are starting your first job after college, you are in a great position to make some choices that can help you to be successful financially.
Remember, landing a good job is only part of building wealth and being successful financially. It is just as important to manage your money well and start saving in order to make it work for you. Even if you are not making a lot of money, these habits can set you down the path to building wealth and being successful.
Save for Retirement
The first thing you should do is save for retirement. If your company offers a matching contribution, then contribute up to that percentage in order to take full advantage of the match. After all, it's basically free money.
If you are out of debt, you can work up to saving between 10-15% percent of your income for retirement. The earlier you start, the less you'll need to contribute, thanks to compounding interest.
Set a Budget
Although this may seem like an obvious step, it is one thing that many people don't do. Creating the habit of planning your spending and sticking to your budget will help you do more with the money that you earn.
For example, you can make a great salary and still end up in debt or with little to show for it if you don't stick to a budget. Learning to budget is the key to building your wealth and taking control of your finances.
If you do not know how to budget, find budgeting software and take classes about budgeting. Your church or bank may also offer budgeting classes.
Set Financial Goals
It helps to have clear cut goals when it comes to managing your money. Take the time to set financial goals each year and write out actionable steps you can take to achieve these goals.
Read books about finances, subscribe to magazines, and attend classes, so that when it is time to take the next step in your plan you are ready.
Once you land your first job, stop using your credit cards. Limit the amount of debt that you take on from here on out. Other than buying a car or buying a home, you should try to pay cash for everything else that you need.
If you currently have credit card debt, personal loans, or student loans work out a plan that will help you to pay off your debt more quickly. Your budget will help you to reach these goals. Take a minute to add up how much you owe in debt payments each month and then think about what you could do with that money instead, like invest it or put it toward your retirement savings.
Whether it is money or time, make it a priority to find a way to give back to your community or the world in general. There are so many people struggling throughout the world, and you have the opportunity to make a difference.
Volunteer opportunities may be simple like volunteering for a day or two each year at your local food pantry or more extensive like doing volunteer tourism. No matter what you choose, be sure to research to make sure that the money or time that you donate is doing the good you want it to.
Updated by Rachel Morgan Cautero.