How Should Young Professionals Manage Their Money?
As a young professional, you are likely starting to gain some financial confidence. You’ve worked hard to get a job that you enjoy, and it may be starting to pay off. Now, it is time to start making your paycheck work for you. Even if you don’t think you have enough money to accomplish all of your goals right now, putting a smart framework in place now can help you to avoid many financial obstacles later. Here are a few places to start.
Create an Emergency Savings Fund
Tuck $1,000 or more into a savings account at your local bank. Use it only when there is an emergency, such as a breakdown of your vehicle. This small amount of money can help you avoid using high-interest rate credit cards for unexpected expenditures like this. Even a modest amount can give you meaningful peace of mind.
Put Bonuses Aside
As your career advances, you may qualify for bonuses. This is money that’s not already planned into your budget — use it wisely. While it might be tempting to splurge on a new gadget or something else, putting it away will be more helpful to you in the long-run. You may wish to put it into a CD or another high-earning account, as these allow it to go to work for you more fully.
Consider Retirement Accounts
The sooner you begin funding a retirement account, the less you have to put into it to achieve your long-term financial goals. Consider retirement accounts sponsored by your employer, if possible, to capture any type of employer match. However, if they do not offer one, open an IRA with your local bank. It takes only a few minutes to set up and allows you significantly grow your retirement fund, and local.
Get Wise with Checking, Too
A basic checking account is an important asset for today’s young professional. Even if you’ve never used one before, they can be the foundation of your financial health. Use them to track your spending and as a tool to help you minimize fees for making payments. It is always a good idea to invest in a checking account so you can transfer money to and from other accounts. Link to your retirement account, investment accounts, as well as your savings so you can easily add to those when you want to.
Most importantly, establish a budget. Start planning where you will spend your money on a consistent basis. To build financial stability in the long term, you need to have the right framework in place. The good news is that your local bank can help you with every step, and assist you in choosing what’s right for you so your paycheck goes further.