How to Manage Money When You Start Earning

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Photo by CC user 401 (K) 2012 on Flickr.

When I first started working full time I was still living with my parents, I had bought a cheap car a couple of months beforehand and I had absolutely no responsibilities other than my road tax and my car insurance. Looking back, I now realize that this was a perfect opportunity for me to sensibly manage my money so that I could have a bright future.

Unfortunately at that time, I was 21 years old and pretty much blew my paycheck each month on partying and general recklessness, if only I had known then what I know now. If you are entering the world of work and want to avoid making the mistakes that I did then here are some things that I wish I’d done at that tender age.

Save Save Save

There is a huge temptation to spend all of your salary each month and not make any plans for the future, after all, you are young and probably think that things will stay the same for ever, they won’t. The far better option is to be smart and start saving some of your money as early as possible. Look to save a quarter of your monthly income, you will thank yourself for the decision to do this when the time comes along to buy a house. I have quite a hefty mortgage and had I saved better then I could’ve got a much better deal on my borrowing.

Consult Someone

People seem to have this notion that great financial advisors like Keith Springer are solely for the rich and famous in this World, that is not correct. In fact using financial advisors should be encouraged from an early age when we are less financially literate. They can offer you great advice on what to do with your money both now and going forward and they can even help you to find great bank accounts and help you make savings plans. You don’t need to meet with one on a weekly basis, just go and see one, lay out your financial situation to them and see what advice they can offer you when it comes to being smart with your money.

Monthly Budget

Remember that you are in it for the long-haul when you approach your finances, of course you could die tomorrow but let’s assume that you aren’t going to and work out how best to set yourself up for the future. A solid monthly budget can help you to stay within your financial goals, budget for everything even if it is alcohol and party money or gadget-buying money, the point of the budget is to control your spends. If you sit at the beginning of each month, take a look at your salary, remove the amount that you wish to save and any other costs which you cannot avoid paying (car insurance etc.) you will be left with your spends for the month, try and split this up into weeks until you get paid again and stick to your plan. Doing this early on will really help you out in the future when you start paying bills.

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