Money Management Starts With Your First Job - Blog Popular Bank

05.16.2016 /

Money Management Starts With Your First Job

If you’ve just finished college and you’re starting your first job, you may be considering additional steps toward establishing your independence. For example, you might be thinking of renting an apartment or buying a car. But before you make decisions about how to spend your hard-earned money, there are steps you should take for managing your finances that can help protect you from ending up with too little money when you most need and want it.

Popular Bank gets you.

Once you’ve landed your first job, we can help you take charge of your finances so that you’ll be in control of your financial future!

Learning a new job and organizing your life, especially your finances, can be overwhelming when they happen all at once. That’s why Popular Bank offers tips to help you get started on the path toward making wise financial decisions and practicing healthy financial habits. 

Tips for short- and long-term financial health include:

Establish a budget

Establish a budget, including figuring your take-home pay, mandatory expenses (such as rent, student loans, medical insurance premium, transportation, utilities, grocery bill, and costs of recreational activities), and calculating what you can save. Remember that taxes, health insurance payments, and other deductions take a large bite out of your paycheck.

Check credit report annually

Check your credit report annually to confirm there are no errors, resolve previous issues, and ensure your credit score is as high as possible.

Get a low-interest credit card

Get a low-interest credit card that you can use and pay off in full each month to help establish your credit history and increase your FICO score.

Create an emergency fund

Create an emergency fund that’s 6 to 12 months of your income to cover unexpected expenses such as medical bills

Create a savings fund for short-term goals

Create a savings fund for short-term goals such as buying a car or putting a down payment on a home.

Contribute to your retirement account

If your employer offers a 401K plan, contribute up to the company match. If your employer doesn’t offer a 401K plan, open a Roth IRA and contribute to the Roth IRA limit every year.

Saving your earnings in a retirement account can add up to large sums, especially if you start saving when you’re young. For example, if you make $50,000 a year and contribute 1% of your biweekly paycheck to your 401K with a company match of 100% up to 3% of your pay, you’ll have approximately $294,000 in 40 years. Increasing your contribution to 3% will result in $881,000 in savings, assuming you average a 4% annual increase in salary with a 6% rate of return. Get preliminary investment guidance to help you achieve the 6% rate of return.

Pay off school loans and other outstanding debt

Pay off school loans and other outstanding debt based on what your income allows.

Pay all your bills on time

Plan for yearly federal and state taxes

Enlist a financial advisor

Select a health insurance plan that’s based on your medical needs

Protect your paycheck with disability insurance

Protect your paycheck with disability insurance to pay a portion of your salary if you become sick or injured and cannot work.

Taking advantage of employer perks

Take advantage of employer perks such as coverage for cellphone bills, laptops, and gym memberships.

Forming healthy financial habits at the start of your career can greatly affect your short- and long-term financial outcomes. Even if retirement seems distant, saving, investing, and managing your spending when you get your first paycheck and thereafter are key to being prepared for your future financial needs.

Call or visit Popular Bank today. Our financial counselors are eager to help you!

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