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The Ultimate Guide to Manage Your First Pay check Right

The Ultimate Guide to Manage Your First Pay check Right

The excitement of your first real job comes with the anticipation of your first real paycheck, in addition to musings about what to do with your hard earned money. However, when it comes down to the payday, nothing can rain on your parade more than receiving a much smaller figure than you were promised. Deductions for health insurance premiums, taxes, and certain other employee related costs can leave a rather inadequate amount to pay for your rent, food, bills, and other necessities. However, if you spare some time for saving and budgeting, you might even be able to pay off your loans and retirement funds down the road, in addition to making ends meet.  While managing your own finances can be a rather daunting task, this feat is absolutely necessary for people with limited means.

Developing a realistic budget based on your expenses and initial salary can foremost ensure that you don’t end up broke and back to your parent’s nest by the end of the month. It can be hard to know what to do with your money when you have never had to deal with an actual budget, so here are a few tips on helping millennials make budget for their first job:

First things first—pay off debt

Auto loan debts, student load debt, credit card debt; sounds familiar? These debts plague the lives of every young worker. Why not leverage your new source of income to roll the ball with repaying your debts, just like your lenders expect you to. This is all the more important because the sky high interest rates can cripple your financial standing in the long run, and make it a challenge to move forward with your career. As a new earner, paying off debts should be high on your list. This doesn’t entail paying off the entire balance, until you are far behind on your payments, but you should factor into your paycheck the fact that you are right on schedule with your payments.

If you are one of those people who get into the habit of paying only the minimum payment for your credit card debt each month, it’s high time to change your ways as soon as possible. Minimum payments can protract your payments out to years, costing thousands of dollars in interest. Make it your utmost priority to pay off your high interest credit card debt first, before it accumulates to insurmountable monstrosity.

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If you have any pending student loans, you generally get 3-6 months after graduation before you are expected to pay. Instead of whiling away your grace period to rest on your laurels, you should plan how to go about your payments before they commence. Factor in the minimum payment in your budget and determine if perhaps you can afford to spare more than the minimum. If so great! You can simply restructure your budget around it.

Set a Budget

If prior to this job you were in in school, chances are your finances were pretty basic and making ends meet was no rocket science. You likely had some preliminary utilities and bills to pay, and your education was probably funded by student loans or any third party source. However, now that you have crossed over to the workforce threshold and all that comes with it, your cash flow needs will undergo a drastic transformation, causing you to rethink how to make the most of your money.

After you determine what portion of your paychecks will be left over after payroll and income taxes, it is time to sit back and jot down your monthly expenses; i.e. your needs and probable wants. How much is your current rent and will you be moving to a nicer place now that you have the extra cash? How much time do you get before you absolutely have to start paying back your student loans, and how much can you afford to pay? Such big expenditures determine where a significant chunk of your money has to go every month.

When working up your budget, it is prudent to start with your fixed monthly bills, including your credit card payments, internet, phone, utilities, car insurance, renters insurance, student loan,  car payment, and your rent. To that, add up your variable work related monthly expenses, including:

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  • Travel

Only a fortunate few get to live within a walking proximity of their workplace; the rest have to travel and traveling requires cash. So unless you cycle to work, you need to add the cost of traveling to your expenditures. If you use public transport, it’s a good decision to purchase a season ticket that lasts an entire year.

  • Clothes

If your job entails special clothing or a uniform, this is generally supplied by the employer. However, considering your personal wardrobe and everyday work clothing, such as smart clothing and suits, you need to buy them yourself. While work clothes can touch the higher end of the price spectrum, you can shop around super markets and the high streets to find reasonable work wear ranges, or even check online stores for great bargains.

  • Food and drink

You’ll need to have lunch at the office everyday so you can decide between taking your own in and buying it there. Eating out regularly can cast a shadow over you finances, but some companies incorporate canteens that offer cheaper meals to employees.

  • Mobile phone

Being away from your family and friends while at work requires you to use your phone every day. Check to see if you are not going overboard with your allowances and also consider switching your phone tariff.

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  • Socializing

This expenditure is the toughest to figure out on your first job since you are not familiar with the social scene of your new workplace. Whether you would need to join a dinner party to be “one of the girls”, or decamp to the wine bar with the entire team for the happy hour every Thursday, how you choose to socialize at work dictates your budgeting decisions.

Next, you need to deduct your monthly expenditures and cash needs from your take-home pay to calculate your discretionary income before deciding what portion of this pay you want to save each month. If the remnant of your salary doesn’t promise much prospects for saving, review your variable expenses, such as entertainment, shopping, and other miscellaneous, to see where you can cut back.

Once you get a hold of monthly savings goal, make sure to automate the transfer of funds into your saving account so that you avoid tapping into your savings every now and then for impulse buys.

Plan for Emergencies

Planning for a saving fund from day one lends you the resources you need to make major purchases down the road, in addition to helping you weather financial storms. A broken cell phone, a car accident, or a layoff can greatly disrupt your income and wreak havoc on your budget. Putting away some petty cash in the sunny days can help you avert using credit cards and get sucked deeper into the swamp on a rainy day.

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To garner a vestige of financial stability, you should ideally try to save the equivalent of up to 3-6 month’s worth of your salary. Once you have met this goal successfully, forget that the money exists. Keep your money isolated by moving it to an account not linked to checking. Going to such rigid measures ensures that you don’t transfer funds with the push of a button for whimsical purchases.

Limit Your Debt

While regularly using a credit card can help you build credit, it is not prudent to make impulse purchases that you can’t pay for right away. If you are already in the throes of a high-interest credit card debt, devote a significant chunk of your cash that you have set aside for savings towards your outstanding balances. While paying off high interest debts should be your utmost priority, do not overlook the necessity of having an emergency fund in place.

The grace period that you are entitled to before you have to start paying back your student loans, is a great time to save as much as you can or even cut some credit card debt. Budgeting your salary from the beginning can avert your paycheck from draining as soon as the bills start pouring in.

Save for Retirement

Sign up as soon as possible if your company offers a 401(k) retirement savings plan. If not, a traditional Individual Retirement Account (IRA) or a ROTH might suit you better. While these contributions come out of your pocket, if you get used to your full pay and delay enrollment, it might be harder for you to allocate money into your retirement funds later. It’s better to start saving early as it helps your investments to grow and bolsters the money that you will make over the years. Even if you find it hard to contribute a lot at the start, consider a minimum to get your employer’s best matching contribution, or perhaps 1 percent contribution, and then build up from there. I wrote this article with help of my childhood friend and co-founder of couponbend.com Vicki James. She is my best friend and we discussed many points before i complete this awesome article.Enjoy reading!

Featured photo credit: Earn Real Money via lifehack.org

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5 Powerful Ideas on How to Be Productive at Work

5 Powerful Ideas on How to Be Productive at Work

Not being able to stay productive at work is a problem that everyone runs into at some point; no matter how much you like your job, there are certain factors that prevent you from staying at maximum proficiency throughout the whole day.

A lack of productive focus at work can lead to extra stress on yourself, missed deadlines, passed opportunities, raise denial, demotion and even termination.

So, if you are someone who has trouble with your productivity, here are five effective tips on how to be productive at work:

1. Take breaks

First and foremost, it’s important for you to take regular breaks. Trying to work throughout the whole day will tire your brain, which will then cause you to doze off and think about something else.

If you keep working your brain, it will fill up and get jumbled with information—sort of like a computer hard drive. Taking a break would be like resetting your computer so that it can start afresh, or de-fragmenting the data so that all the information is in order.

This is a great thing because it allows you to solve problems you were unable to solve previously, by seeing it differently; if you are able to organize your thoughts properly, you will be able to take in new information more easily.

There have even been studies about methods of saving time and staying proficient, and taking breaks is one of the leading factors.

According to Christine Hohlbaum, the author of The Power of Slow: 101 Ways to Save Time in Our 24/7 World, eating lunch away from your work area every day will greatly increase your productivity. Eating in your work area will give you the illusion that you are working, but whether you like it or not, your brain will begin to wander and think of something else and then you will be working tirelessly with no progress.

It’s important to take breaks before and during work too: if you come to work in a rush because you woke up late, your mind will not be mentally prepared for the day ahead, and you will spend the first 10 to 15 minutes trying to get organized and composed before you can actually start working.

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Instead, you should try to wake up 20 minutes earlier than the time it would take you to “just get” to work. Take that time to stare off into space and not worry about anything.

If you do this, your brain will be empty and ready for all the challenges it has coming for the next few hours.

If your employer only allows a set amount of breaks during the workday, that doesn’t mean you can’t just get up and walk around for a quick break every now and then.

Even if it’s only 5 minutes, it will refresh your brain and you will gain renewed energy to do your job.

Learn more about The Importance of Scheduling Downtime.

2. Pace yourself and balance your workload

One problem that most people run into is that they underestimate the amount of work they have to do, and end up doing 50% of the work in the last 20% of the time they have to do it. This is due to an issue of balancing one’s workload.

When you receive a project, or are doing a job you normally do, take some time to really plan out your work schedule.

Consider how much time it took you to do this last time; determine how you can break the project into smaller parts and which can only be accomplished on certain days, and whether anything might come up that could interfere with your plan.

All of these questions are important for starting on a project, and when answered, they will help you stay productive throughout each day.

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For example, if you needed to design a project to map out the amount of aid offered in various regions after Hurricane Sandy, you can break it up as follows:

You will need to know what organizations are offering help to begin with, how much aid those organizations gave or plan to give, which regions were hit by Sandy, and which regions suffered the greatest losses.

You start this project on a Thursday and know you have until Tuesday to gather this information.

In order to stay productive, you need to plan out your work week—now you know you can find out which organizations are involved in helping the Hurricane Sandy Victims any day since that information is online, but gathering information on the organizations may require you to call them.

Since phone calls can only be done during week days, you have to plan on gathering all of that information before the weekend comes.

That is just one example of a situation in which pre-planning your project will help you stay productive; had you researched the affected regions first, you would not have received the info on the organizations until the weekend, and may have missed your chance to call them.

That, in turn, would have wasted time you could have spent working on this project to finish it.

Knowing what you need to do, when you can do it, and how long it will take you, is important in balancing your workload and being more productive and efficient.

3. Put your work first

This is an issue that usually occurs with young people who are new to the workforce: they’re often tempted with offers to go out at midday, and then come back lost in thought and unfocused on their work-related tasks.

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While it is important to take breaks, your breaks should consist of you clearing your mind, not loading it up with other less important information—like sports.

However, that is not the only situation where you need to worry about putting your work first before all else.

In a work environment, the senior employees will oftentimes push some of their menial tasks onto the newer employees. If you fall into that category, you need to know that their work is not your work, so if you have tasks that need to be done, you need to do it first.

If you are a new employee, you must learn to say no to other people even when it means you may not be in their good graces anymore. You can help others out once your work is done, but you are paid to do your own work, not anyone else’s.

4. Don’t open your browser unless you need them

In this day and age, everyone is constantly monitoring their social network. This is a major pain point for companies, which is why many don’t allow employees to access their social networks on company workstations.

When you are at work, disconnect the internet from your phone and keep your browsers closed so you’re not tempted to log onto your social media accounts or browse any sites that are not work-related.

If you keep your browsers closed and phone tucked away, only to be used in an emergency, you will find yourself being a more productive employee right away. 

5. Try to be happy and optimistic

If you always have a negative outlook on life, you will be more distracted and less motivated to get work done, so it’s important for you to start your day off right.

This can be done by having a good breakfast or by taking time in the morning to watch one of your favorite TV shows before work.

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If you are happy, you will find yourself able to work much more productively as your mind won’t wander into worrying about something else.

Also, if you stay optimistic and keep telling yourself that you can do whatever you set your mind to, the tasks will seem much less daunting and will go by much more quickly.

Take a look at more effective ways to stay positive at work:

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Happiness and optimism are the keys to being a productive and happy employee.

All in all, heed the five tips above and you will find yourself being one of the most productive people at your company.

While you do not need to master them all, each and every one of them will help you become a better and more efficient employee.

Featured photo credit: Pexels via pexels.com

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