This may or may not be a surprise to you, but here it goes: I’m about to start my first REAL job with a real salary!
That’s right, I’ve never before had a permanent, full-time job where I earned a real wage. Right now I do work full time, but I live on a small stipend each month. Previously, I’ve been a graduate teaching/research assistant and held numerous other paid internships as well as summer and part-time jobs. I’ve actually been working and getting a real paycheck since I was 14.
Despite all my experiences and preparation, I’m a little scared. Not that I’m traumatized, but I am afraid that I won’t manage my money the “right” way.
I’ve always prided myself on preparing for when this would time in my life would arrive. I’ve been good with budgeting, and I even would consider it to be a skill to live on the low income I have while volunteering . I’ve always told myself that I’m fine with living below my means. But, even with all this preparation, I’m a little bit scared for the real thing. Never having had the money before, I don’t know exactly how it will work out. I can picture myself saving and investing a certain amount of each paycheck, but, at the same time, I feel like I’ll always be wondering “Should I be saving more?”
I’ve seen lots of twenty-somethings crash and burn at this transition stage of life. I’ve seen the typical new car purchase right after finishing college. I’ve watched others buy iPhones and other gadgets before even starting a new job. Then there are fancy downtown apartments and eating out multiple nights a week. I know spending on these things aren’t “me,” but the temptations are always there.
There are so many things that I haven’t dealt with before, and I’m not sure how they’ll impact my income. I’ve never had a substantial amount of my paycheck taken for income taxes (actually, I’m not even sure what my after-tax income will be). I’ve also never had to deal with healthcare costs either. I’m sure it’ll be a learning process, and I hope to figure it out quickly.
Here are my general plans so far:
1. Try to stick as close to the same budget as I am now. This is going to be a challenge, and I’m clearly going to have to increase spending a little bit. But I know that I don’t need to start buying all sorts of stuff that I don’t need. The best strategy is to try my best to stay where I’m at now and slowly increase spending to a comfortable level.
2. Allocate a percentage of each paycheck to certain areas, including savings and investments. I’ve always liked T. Harv Eker’s 6 investment jars. The simplicity makes the chances of succeeding better, and I think everything there is adequate. This plan also allocates some money towards spending however I wish, which is essential. If you don’t budget for fun, you’re destined for budget failure. I’m also a fan of Dave Ramsey, and I’ll use his strategy as a general guideline (although I don’t agree with all of his advice).
3. I want to pay off my college debt immediately. I’m not going to mess around with this. I have only about $3,500 in loan debt left to be paid. My goal is to have this paid off by the end of 2011.
4. I’m going to adequately fund a Roth IRA for the first time. Unfortunately I won’t have access to any retirement benefits from my job, so it’s up to me to make the most I can out of retirement savings. I have a Roth IRA set up already, but it’s not getting much action. I’m gonna change that.
5. I’m going to emphasize saving for the short term. While I want to fund a Roth IRA, I’m not going to go too crazy saving for retirement. I have more short term financial concerns that I’d like to think about. First off, I’d really like to travel extensively next summer. I’m going to need several thousand $$ to do that. Secondly, I’m not sure what my future holds in terms of careers, work, and self employment. I’m really working towards taking a run at working for myself, freelancing, and improving my skills, and doing that will require some savings as backup while I make the transition. Much of my savings will be allocated towards accomplishing my working goals for now.
Considering everything, I think life will be better with a larger paycheck, but I know not all my problems will be solved by simply making more.
What do you think of my plan so far? Do you have any advice or lessons you learned?
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photo by: *_Abhi_*
You have a big, bright future ahead Jeff. Your awesome attitude will ensure success. Where are you planning on travelling to next summer?
Thanks, Hunter! I’m really not sure where I’m heading yet, I just know that I’m doing it. Now that you bring it up, it would be great to make some concrete plans and have a real goal in mind to work towards.
Sounds like you’re already making great decisions about where the “new found money” will go to….ie: Roth, health insurance, pay off loan. I think it’s important to figure out what amount you think you’ll need for travelling next summer, add 20% more to that , and set aside the appropriate amount in the “travel fund” acct. weekly since that’s your dream plans. Unaccounted for expenses eat up paychecks fast!
That’s a great idea for the traveling. I already have a separate account for bicycle expenses, and I’ve been very pleased with how this has worked out. But yeah, you’re right, I should definitely do the same for traveling.
Good luck!! I think its great that you plan to stay to your current budget even though you will have a pretty paycheck coming in. I also agree with Doreen below that you should set up a separate travel account. I transfer money into mine on a monthly basis and it really adds up. It also helps lessen the impact of travelling throughout the year and having to come up with money quickly!
2 votes for separate travel accounts! I need to get on this right away. Thanks for the advice!
Hey, this is great! My suggestion is to remember that if you save too much, you can always spend it…but if you spend it already….it’s too late to save it 🙂
That’s a great and easy to remember tip. Thanks, Georgene.
Congrats on your new job!! I know you are going to do awesome. I third the separate vacation savings account. With all the thought you have given the next stage of your income/spending you are going to do great. Plus, we will keep you on target!! 🙂
Haha I hope you do keep me on target. Thanks, Ashley!
Congratulations on your new job and better income. Since you’re already writing a PF blog, I suspect you’ll do just fine…
Thank you. I hope so, but there’s still a lot I need to learn.
Congratulations! It’s tough out there for recent grads, so getting a job is proof enough you’re making good decisions.
Would you recommend the route you took after graduation? Do you feel that the experiences were worth it, or that it taught you to better manage your new found $$$?
Thanks, JT. I definitely think my experiences thus far will play a huge role in how I manage my money going forward. I decided to do my year of volunteer service with that in mind.
If I were to go back, I wouldn’t have done grad school straight through. I think there’s something to be said for going out into the working world and testing out what you like to do before going for more education. Luckily, my grad degree cost me very little money.
Congrats on the new job, but don’t get caught up on living the 9 to 5 your entire life
Don’t worry, I’ve already been thinking about how I’m going to get my way out of it 🙂
Super! Your plans sound well thought out & reasonable. You should do just fine. I like your idea of living as close to your current budget as possible. You’ll be able to avoid lifestyle inflation by remembering your goal of travel. If it were me I’d put some pictures of the places I wanted to visit around my apartment to keep me motivated. But in your case, you probably don’t need those helps. Have fun at the new job!
Thank you, Maggie. I like the pictures idea, and I think that definitely helps for motivation.
Congratulations! I think it’s awesome that you’re thinking about this stuff ahead of time. Too many people take a “wait and see” approach and end up throwing away money. Definitely stick to your current budget as much as possible, but allow for changes as they come. A full time “real job” often has hidden expenses, especially in the beginning. Keep us posted!
Thanks, Andrea! I’ll definitely have updates coming.
Congrats! Those sound like great goals. I doubt your new income will go to waste.
Thanks! I’m hoping I’ve laid a good foundation for myself, but we will see.
hooray extensive travel next summer! Now, where am I going to scrounge up my few thousand for that…..
Hey Jeff! Help put things in context. Was this posted in July 2011? Your latest post is about wanting to quit in May 2012? Sorry for confusion.
Hey Sam, yes, this was posted July 22, 2011. The deal is that I’m basically being hired by the nonprofit where I’m an AmeriCorps VISTA now to stay on through May 2012 while my girlfriend finishes up graduate school here in New Haven. My nonprofit is aware of my intentions to leave both this job and New Haven next May and agreed to keep me on as a paid employee until then. Although this is my first real job, my stay will be somewhat short and I’ll be concentrating on saving up as much as possible to make the leap to freelancing once May 2012 rolls around.
Hope this clears things up a bit!