May 17, 2018 by Administrator

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For the youth of America, from college graduates to young Millennials, it’s an exciting time ­– graduating from college, scoring your first full-time job or renting your first apartment are huge steps.

So now the real work is about to begin. Saving money. Sure, sure you say. I hear the same tune from family and older friends: save for the future and don’t spend every dollar I earn. This is sage advice from loved ones who want to see you succeed rather than start off in debt.

Here are 10 simple tips for managing, saving, and spending money when you don’t have much to start.

1.      Know the difference between gross and net pay. If you’ve never had a full-time salary before—your “gross pay” (what you negotiated as your salary) is not the dollar figure you’ll receive in your “net paycheck.” Look at your paystub to see the amount of federal, state, Social Security and Medicare taxes deducted. Whatever is left after those deductions is your net pay…the amount you have to live on for the pay period. Plan accordingly!

2.      Take advantage of your full benefits package. If you’re employed full-time, you could be passing up free money through your employer without even realizing it. In addition to healthcare, vision and dental insurance, many companies offer money-saving advantages like discounted gym memberships, transportation reimbursements and most important, matching 401(k) programs. If you aren’t sure how much to contribute, there’s an online tool that can help like this one. 

3.      Financial experts recommend following the 50/20/30 budget rule.   Once you receive your first few paychecks, sit down with a calculator. Some financial experts recommend following the 50/20/30 rule: 50 percent of each paycheck goes toward non-negotiable “fixed” costs like rent, bills and groceries; 20 percent goes toward savings; and 30 percent is spent on things like personal care (clothing, mani-pedis), travel and entertainment.

4.      Become a detective to track your spending habits. Look at a few recent bank statements and credit card bills or write down everything you spend money on in a week and you might discover some surprising patterns. Do you indulge in costly morning lattes or evening cocktails more often than you realize? Maybe you splurge on new shoes or expensive dinners right after you receive a paycheck. Recognizing—and curbing—these unplanned, impulse purchases can help you stay at or even under your budget.

5.      Set up automatic deposits to your savings account. If you don’t see it, you won’t know it’s missing. If your salary is direct deposited into your checking account each month, set up an automated transfer to a different savings account or Roth IRA. If all your budget will allow is $25 to $50 per deposit, so be it. The amount will grow over time.

6.      Don’t touch! Your savings account is off limits. What’s the point of saving if you are always “borrowing” from your account? Only dip into your savings for emergencies such as medical issues, property or vehicle damage or sudden unemployment.

7.      Save supplemental income from side gigs. Whether you’re a recent graduate or employed Millennial, side-gig opportunities flourish everywhere if you look. Dog walking, blogging or freelancing in your field are all ways to supplement your regular income and add substantial amounts to your savings for a rainy day. 

8.      Shave a little here and there from your cost-of-living expenses. Just like you would search for the best deals when shopping for laptops, shoes or electronics, check on specials or discounts for more affordable housing, utilities or cell phone offers. At the grocery, digital coupon clipping apps makes saving a lot easier. And decide which name brands are important—you might want your favorite ketchup, but does it really matter what type of sponge or paper goods you buy?

9.      Splurge responsibly. Now that you are on the road to becoming a saving maven, it’s essential to occasionally reward yourself. Instead of spending indiscriminately throughout the month, establish a set amount of money for splurging in your budget, just like you would with any other expense. This is for a guilt-free indulgence or two that you know you can afford ahead of time. Just make sure you jump back into your money-saving habits the next day.

10.  Use a strategy to repay student loans. You may be one of the 45 million Americans with student loan debt. When repaying your debt, a little strategic planning goes a long way. See if refinancing the terms of your loan could allow you to pay a lower interest rate and extend the repayment period. Depending on your income, you may also qualify for loan deferment or forbearance. (Both paths are temporary. Deferment can last up to 36 months and forbearance 12 months.) The federal government also offers income-based repayment plans, which limit the percentage of income qualified applicants must pay towards their loans. Be sure to explore ALL of your options before making any changes to your student loans, as some changes may preclude you from future options/benefits. 

The overarching theme covered here today is to take time to understand what is important to you when it comes to spending and saving your hard-earned funds. A financial professional can help you set your priorities, save for the future, pay off debts and still spend discretionary dollars – even when you are just starting out. Click Changing Our Story to request to speak with a Prudential Financial Professional in your area.

 

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