There’s a certain thrill that comes with earning your first paycheck.
But entering the working world comes with plenty of big decisions—especially surrounding what to do with your newfound money.
“Whether you’re just graduating from high school or college, there are some tough decisions to make when it comes time to decide what your priorities are,” said Becky Beschorner, assistant vice president, community outreach and education at Dupaco Community Credit Union.
Consider these tips to make the most out of your hard-earned money.
Establish a budget immediately
Creating and following a budget can help you make conscious decisions about how you spend your money so you can afford the things you need and reach your goals. With a zero-sum budget, you can start giving every dollar you earn a purpose.
“Once you get off track on your spending, it’s very difficult to get things back in line,” Beschorner said. “Going from working part-time in college to a full-time career is a huge budget shift. A lot more money is coming in, but there’s also a lot more money going out.”
A free Dupaco Money Makeover can show you where your money is going and identify areas where you can cut costs and save more.
Use your paycheck to pay yourself first
A budget can help you determine a realistic savings plan.
“One big mistake young adults make is realizing their paychecks don’t go as far as they would like them to,” Beschorner said. “Between rent, utilities, cell phone and, most importantly, student loan payments, there isn’t always a lot of money left. Most people are living paycheck to paycheck and forget to save a little bit first.”
Saving the right amount is key.
If you try to save more than your budget allows, you start dipping into your savings. Utilizing multiple accounts, including Dupaco’s You-Name-It Savings accounts, can help you systematically save for the things and goals important to you.
“I always encourage people to have more than one account. That way, they have one for their bills and one for their savings,” Beschorner said. “It’s easier to save when you can’t see that money all the time. But the tricky part is finding a good balance.”
Contribute to your company’s 401(k) plan
One way you can pay yourself first is by taking advantage of your employer’s 401(k) retirement savings plan—especially if the company makes matching contributions. Many times, employers will match a percentage of your contributions.
“It’s free money,” Beschorner said.
Practice before you purchase
Months before you plan to make a big purchase, get a feel for how that extra monthly payment will impact your budget.
“People sometimes forget that a shiny new car comes with a monthly payment for the next five to seven years and higher car insurance premiums,” Beschorner said.
Before you make the purchase, save the projected monthly payment every month for half a year. If you want to buy a new car and can afford a $300 payment, put $300 into a savings account every month for six months.
“This way you know how having that payment in your budget will feel, and you just saved some money for a down payment,” Beschorner said.
Take advantage of available resources
When it comes to tackling your money goals, your credit union can be an invaluable asset.
“Dupaco is a great resource when it comes to getting young adults started,” Beschorner said. “From figuring out how to establish a zero-sum budget to educating you on your first credit card and dealing with those difficult student loan payments, we have a lot of different options.”