You’re out of university and moving on. Working hard, playing hard, and finally working full time to bring in a decent amount of hard earned cash. Your first good-sized pay cheques can give you quite a buzz – and you may start wondering how you can best make the most of your full time income. After all, there are a lot of different things you can do with a decent amount of money. Below are a few smart money tips every twenty-something should know.
Track That Card
Credit cards are great – they are very much a ‘buy now, pay later’ experience, but beware. When you’re young and have years ahead of you, ‘pay later’ may seem like a distant horizon, so it can be tempting to just buy all the jazzy gadgets you want and pay only the minimum amount on your card each month. You may even want to accept those credit limit increases your card provider so generously seems to keep sending you – but be aware that when it comes to credit cards, the devil is in the detail and the details are in your contract. There may come a time when you really need your card cleared in a hurry, and if your card has more debt than you have savings, you won’t be able to make that transaction.
Credit card companies rely on 20-somethings getting into debt when they’re young – and then they have you at their mercy for years. Interest rates on credit cards are astronomical. You could spend literally decades paying off that amazing pair of boots you only wore once, or that new smartphone that just got superseded by the one that came out yesterday. The smart way to use your card is to make the interest free period work for you and pay your balance down to zero every month when the bill comes in.
Know Your Expenses
Draw up a personal budget for yourself that covers your outgoings in detail; aim to keep a month or two of expenses in your bank account. If it helps, re-define the term ‘broke’ to mean when your account dips below one months’ expenses, rather than when your funds actually run out. This means you will always have some breathing room and a buffer in case of emergencies. You never know when your car will need a replacement part, or your mobile phone screen will crack. It’s as well to have some spare cash on hand for emergencies. If you can’t manage to squirrel away a month’s worth of expenses, them run as tight a budget as you can and work up to it. The important thing is to get that buffer in place.
Prepare for the unexpected
You’ve just been appointed full time work – yay! It may seem like you will never have to worry about unpaid bills again. But if you are unlucky enough to suffer a workplace accident or injury it’s important to be well prepared. Don’t let your well-earned funds suffer by dealing with your misfortune alone – instead, seek legal advice from professionals like Sinnamon Lawyers .
It’s never too early to practice smart money habits. As soon as you start earning decent money, do everything you can to make the most of it. After all, you work hard for your money, so think about making every dollar count.
What’s your top finance tip? Share it by commenting in the box below.