Graduating from school and entering the workforce is an incredible feeling. Not only are you finally done with the initial learning phase of your career, but you’re also FINALLY getting paid for your time rather than paying for classes. Although you’ll miss the football games and the raging house parties, a salary that comes along with a hands-on learning experience is a pretty decent trade-off. The problem is, this newfound income has a habit of giving young professionals a false sense of mega wealth.
If you’ve just graduated and are finally entering the beginning stages of your career, a few tips to manage your spending might help you refrain from overspending with a salary that seems basically limitless compared to the hourly wages of your college job. Here are five simple ways you can effectively manage your spending as a young professional.
1. Use your apps
Our generation is fortunate to have a strong force on our side in terms of budgeting – technology. There is certainly no shortage of apps that can help you track your spending, manage your finances, and even break into the stock market. Here are a few you should check out:
Mint is a popular finance app option among Millennials. This app provides a snapshot of your spending to show you which areas of your life you’re spending most on. It also helps you keep track of your credit score and bill payments.
Level Money is another fantastic app for budgeting that works a little differently than Mint. Once you connect the app to your bank account, it automatically calculates your income and recurring bills to provide you with suggestions for what your daily, weekly, and monthly spending should be.
If you’re looking for a simple way to start investing, the Acorns app is a fantastic option. This app links up to your bank account to automatically invest your spare change in selected stocks. For example, if I spent $3.50 on a snack, the remaining $.50 would be invested.
2. Set savings goals
One of the most common mistakes Millennials make in terms of spending is to spend everything and save nothing. Starting a solid savings account will come in handy when unexpected expenses come up, but it will be even more important when you need to come up with a down payment to purchase a home or car.
If you’re like most of us and are a bit unsure of where to start saving and how much you should be putting away, the Money for 20s expert at About.com has an awesome guide you should check out for more info.
3. Figure out salary/raises after taxes
One of the biggest shocks most Millennials face after receiving their first salaried paycheck is realizing how small it actually is in comparison to the monthly figure they came up with in their head after accepting the offer. This is because taxes take out A LOT of the money you think you’ll see each month. To prepare yourself for the actual amount you’ll be making and avoid overspending, you’ll want to calculate your actual earnings after taxes and on a monthly basis.
This can help you understand not only what your monthly pay will be like, but also how big of an impact your raises might actually make on your monthly earnings.
To check out what your salary will really be after taxes, you can use a salary calculator. I found that this one from ADP was accurate while also providing a simple calculation process.
4. Find less expensive entertainment options
If you’ve ever checked out your bank statement after a night out, you know how much a simple night of bar hopping or clubbing can cost you. If you start tracking your spending and realize that you’re spending the bulk of your monthly income on entertainment, it might be time to cut back a little.
Although this can be exceptionally tough for a young professional with coworkers who like to hit the bars after work or go out for lunches, there are definitely alternative ways to spend time with your coworkers that won’t be quite as detrimental to your wallet.
Instead of going out for drinks one night, maybe consider having a small, potluck style happy hour at your place. If you’re really looking to save, maybe suggest checking out a new hike with your coworkers or taking a trip to the park for ultimate Frisbee instead.
5. Follow budgeting gurus
The final piece of advice I have to offer is to keep an eye out for new money-saving tips and tricks from the financial pros. As the world changes and spending needs change along with it, it’s nice to have some extra support from others who can help you better understand how to stay thrifty and keep your spending in check.
Find a few solid blogs to follow for ongoing information and advice. I highly recommend checking out this resource with a list of some of the top finance blogs in 2016 to make your research a little easier. Once you’ve got a few blogs in mind, check out their social accounts and follow them to keep up on their latest posts. If you’d prefer to check out each site when you have time, you could simply bookmark each blog in your default browser to easily access each one when you’re ready to do some financial reading.
Now that you’ve been given a few simple steps to save as a young professional, it’s time to part putting them into action. Even if you’ve yet to land a job with a professional salary, it can still be super beneficial to start implementing these tips now to prepare for when you’re managing a larger check.
If you have any additional tips or questions, I’d love to hear them. Let me know in the comments below!
Featured photo credit: iStock via istockphoto.com