Pic credits – fitnessfundae.com
If you have managed to land a job in this economy, firstly, congratulations, secondly, try not to count your chickens too soon. Managing ones finances for a rainy day is a must for any professional, something even more important for a newbie in the industry. Students, when they leave college to begin their professional lives, are often ill-equipped to deal with the pressures of financial freedom. One of the biggest questions is how and when should they start saving.
With the way the economy is heading, it is always a good idea to start saving. However small it may seem on a monthly basis, these savings add up and serve as your rainy day fund. Financial security, today, is entirely in the hands of the individuals. There is hardly any security net in the form of the government, and private pension income is also becoming a thing of the past. Many wake up too late to the need of saving money. Saving even large chunks of money late in life is no substitute for saving in small doses over the years. There is a clear gap between the wealth of old and young Americans, making a strong statement for today’s generation to implement money saving tips in their careers.
Saving doesn’t only mean getting discounts or scouting for freebies. It means putting aside money for a rainy day and creating an emergency fund to protect you and your family in case something goes wrong. It is not as if you are never going to be sick, or in debt, or never have bills, saving money is essentially the trick of making money work for you. By finding ways to lower your cost of living on a daily basis, you can build habits that can change the way you lead your life.
Here are a few essential tips on how you can begin saving…
Establish a Budget
Once you have been working for a couple of months and are used to the amount of money you are taking home on a regular basis, figure out how much you can afford to save each month. Mapping out a budget is the perfect way to understand if you are spending more than you are making.
First add up all your essentials; rent, utilities, groceries, transportation, student loans and a car loan. Once this is done, you will know how much is left over from your salary for saving and other spending. Eating out too much, taking taxis, spending on fashionable clothes and the latest trends are all things that will gradually eat away into your pay-check. The bottom-line is this, always spend less than what you make.
Reduce Your Debt without Incurring New Ones
A recent Fidelity Investments study said that 70% of the class of 2013 is graduating with a college-related debt of $35,000. Have a clear idea of the amount of debt you have racked up, and plan your payments accordingly. Learn to hate your debt, and constantly endeavor to chip away at it.
Debt may also hinder your employment prospects as more and more employers are now checking the credit ratings of prospective employees. Making monthly payments against your debts through automatic debits from your account can help you save on interest.
It is never too soon to start investing. As compared to a couple of decades ago, there are many secure investment options now available in the market. Getting a head-start on your investment plan is a brilliant way to save and more importantly, multiply your savings. If you do not want to hire an accountant, many website offer information on stocks, bonds and mutual funds for you to learn.
Participate in Your Employer’s Retirement Plan
Always participate in the retirement plan, like 401(k), offered by your employer. Your contributions are deducted from your pay-check automatically and are tax-deductible. Try and invest enough to qualify for the full match, wherein your employer puts in as much as you do.
This investment can grow, tax-deferred, until you take it out, ideally in retirement. Whatever match your company offers, try and take them up on it, there is no sense in saying no to free money. Do not break your 401(k) prematurely; you will regret not saving it in times of need.
Protect Your Biggest Asset
Most young people feel that they are invulnerable and often skip investing in health insurance. However, illness can strike anyone without warning. Insurance will help you pay for your healthcare in times of accidents or sudden illnesses. Car or home insurance is important, but you are the means of generating the money to pay for those insurance plans. This makes investing in your own health of prime importance.
If you cannot invest in your own health insurance, find out if you can piggy-back on your parents’ plan. Employers generally pay for their employees’ health insurance. In case they don’t, try and find a short-term health insurance plan.
Automate Your Savings
Setting up an automatic savings plan can save you the trouble of consciously saving a particular amount every month. You can take the help of your employer to set up a direct deposit and choose the amount you want to save and have it deducted and put in your account before you get your pay-check. This is one of the best ways to save, because once you have made the decision the money is automatically saved without you having to think about your projected expenses every month.
It is not necessary that saving money be a laborious process, you can make a success of it if you treat it like a game. Set ambitious saving goals and work tirelessly to reduce those parasitic debts eating away at your capital. Make sure that you are living within your means. Americans are not saving enough money, but it doesn’t have to be that way. There are always ways to save more and ensure that you have enough stowed away when the need strikes.
Author Bio: Korie Cantor has been working as a freelance writer for a long time. She has a diverse background in money saving tips. She loves sharing her opinions on the latest issues affecting employees.