3 Things I Wish I Knew Before I Started my First Full-Time Job
After years of frugal living during your study years, the prospects of having a secure good paying job may fill you up with excitement. It may even give you a sense of financial freedom and independence – to purchase and do anything you want (mostly anything).
However, with this power comes great responsibility. You could find yourself struggling with debt and living paycheck to paycheck, or could you find yourself setting up a strong foundation for future years, leading to increased wealth and financial independence (worry-free). It is your choice.
It is important to see money as a responsibility, not a reward.
Having started working full-time at age 19 while studying, I suddenly found myself reaping the fruit of my labor. I had never had so much money in my life and had so little expenses and as you can expect I didn’t know what do with it either.
Although I had the potential to save and invest a lot of money, I was in fact in a difficult financial situation. My success in my early career did not translate to any financial success. I often found myself overspending and living paycheck to paycheck each month. I bought things I wanted but not needed.
Now that I am a bit wiser from learning from past mistakes, I have realised how important it is to set yourself up with the right foundations in order to be successful in the future. Your 20’s is the best time to grow your wealth, not spend it. By being financially disciplined early on in your life, you can make the most of your future when it matters most.
Here are 5 financial strategies that will assist you in creating a prosperous future when starting a full-time job:
Create a Budget
Whether you have major financial responsibilities or not, it is important to know where your money goes. The first step is to track your expenses. I recommend using a web-based budget software that has a mobile app. That way, the software will do all the work for you and provides you with real-time statistics and a useful analysis.
The second step is to create a budget plan, where you allocate your income to certain categories. This step is the most difficult and requires a lot of planning. It is important to prioritise your money to what is most important, such as your financial goals. I recommend saving at least 10-20% of your income, depending on your financial situation. Your budget should help you increase your net worth, so focus on spending less, investing more and paying down your debt. The main purpose of a budget is to prioritise your money, not restrict your lifestyle.
The third step is to follow your budget and adjust it and your lifestyle accordingly. It is important to remain disciplined, and to constantly review and adjust your budget to reflect changes. If you do find yourself over-spending in one category, find ways to save. For example, if your car is getting expensive to run, only travel when it is needed, or use alternative transport modes such as trains or cycling. A budget can tell a lot about a person!
Establish a Good Financial Track Record
Maintaining good financial health is not only beneficial for you, but also the banks. By having a great credit rating, and by being responsible with your money, it will make it easier for banks to let you be responsible for theirs! Your borrowing power will increase, making it easier to get your dream home or to borrow to start a business or purchase an investment property.
Establishing good financial habits early on in your career, whether you have debt or not, can help you increase your credit rating and allow you to borrow more, which can be a good thing if you are responsible with your money.
Important financial habits to start include regular saving and investing, sticking to your budget, being organised with paperwork, increasing your assets, meeting your financial responsibilities (such as bills and debt payments), and paying down more than the minimum off your debt. It is important to understand and meet your financial responsibilities, now and in the future. For example, if you are single and renting, it is important to realise that sometime in the future you will need to spend money on a home and children. It is never too early to prepare for the future.
Manage Your Work-Life Balance Well
Not only does a full-time job affect your financial health, it can also affect your mental health – for better or worse. Although you are earning more money, you are also giving up more of your time. It is important to use your money and time well so you are healthy, wealthy and happy.
For a successful career, it is important to be motivated, positive, hard working and passionate. Maintain great professional relationships as mentors and colleagues can help you succeed faster. Be committed with 100% effort and full of energy.
For a successful personal life, it is important to stay healthy by managing your time well to include exercise and a well-thought diet.
Time goes quick when you work full-time. You will spend most of your life working, sleeping, eating and travelling. It is important to manage the time you have left well in order for a successful and happy life.
What was your experience when starting your first full-time job? What advice would you give to others that are starting theirs? Comment below.