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Let’s face it: the post-graduate transition from not earning in
Before you think about all the ways to spend that first paycheck, including probably buying your friends a round of drinks in celebration, consider this: the money management habits you start now will shape your financial future. Don’t let your paycheck disappear just as it pops up in your account.
Here are four tips for managing your finances from day one:
1. Understand Your Paycheck
Receiving your first paycheck can be exciting yet very stressful. In between the rollercoaster of emotions that comes with handling commitments, challenges, and new opportunities, you should take time to review your pay stub. Familiarize yourself with the federal income tax withholding charges and the actual wages that accurately reflect your annual compensation.
Depending on the company’s mode of payment, you can get this information in various ways. It’s crucial to know how to get your paystub direct deposit or physical paycheck notwithstanding. You also need to check the number of allowances to claim on your W-4 using the IRS withholding calculator. Knowledge is critical, and with it, you can make informed financial decisions.
2. Prepare a Budget
Your first payday might seem like an endless cash supply. You need to remember that life in the workforce poses a whole new challenge regarding handling expenses. Gone are the days of outside sources of
After knowing your exact earnings, analyze and note down all
3. Handle Any Outstanding Debts
With your new source of income, you must start thinking about clearing any outstanding debts. If you’re coming out of school with
The faster you repay these loans, the more interest it’ll save you in the long run. You can also opt for refinancing the loans into one monthly payment with a new servicer. This way, you can secure lower interest rates or adjust your
4. Set Aside an Emergency Fund
Being financially independent can come with its fair share of complications. Sudden illnesses, car accidents, and other emergencies may arise from time to time. You need to be ready for these, or else your financial stability may be at stake. Automatically set aside a specific amount of money from each paycheck for these emergencies.
It’s advisable to have one to two months’ worth of
Lay a Solid Financial Foundation for Your Future
Getting out of