7 Tips You Can Use To Manage Your Personal Finances After Getting A Job
#AskDanielTrust is a weekly column and vlog where Daniel Trust, an award-winning social entrepreneur, motivational speaker and youth advocate, answers questions and gives advice to young people from around the world. Do you have a question for Daniel Trust? If so, please connect and send him a message on Instagram, Facebook, Twitter or Linkedin.
In this week’s #AskDanielTrust, Kevin says: Daniel, I loved your last video where you shared strategies young people can use to find and secure jobs. My question is: Once a young person secures a job, do you have any recommendations on how they can manage their money?
Kevin, this is a great question and thank you so much for your kind words. Yes, I have recommendations on how young people can manage their money once they’ve secured a job.
In this column and vlog, I am going to share 7 tips that can help you manage your money when you’ve just secured a job and are beginning your professional career.
1. Create a personal monthly budget
The first thing you should do after securing a job is to create a monthly budget that lists all your income and expenses. A budget will help you manage your money in a very big way.
To create a budget, use tools like Google sheets or Microsoft excel. If you don’t have access to these tools, you can simply write your budget down on paper, in a book or journal.
In your budget, list all your monthly income and expenses. Your income will be your pay from your job or any other income you receive. Your expenses will be like rent, electricity, cell phone bill, and other expenses that you have.
As you make your budget, please make sure your income is greater than your expenses. If your expenses are greater than your income, then you need to eliminate a few things from your expenses or find more income to cover those expenses.
I truly believe creating a monthly budget is the first step to making sure you are managing your personal finances correctly. Without a budget, you will spend money you don’t have and this could lead you into debt.
2. Open a checking account with a debit card
Once you’ve created a budget, I want you to go to your local bank and open a checking account. A checking account, which comes with a debit card, will make it easy and convenient for you to purchase things and pay your bills either in person or online.
Before you go to the bank, I recommend you do some research online for local banks in your city and see which banks offer free checking accounts or ways that you can waive monthly fees. You can also ask adults in your life for bank recommendations.
The personal banker that helps you open the checking account should explain everything about that checking account including how it works and the fees that you might be charged.
One of the fees I want you to be aware of is the overdraft fee. The bank will charge you this fee when you make a purchase or pay a bill and you don’t have sufficient funds in your checking account to cover that purchase or bill. That is why it’s so important to have a budget.
3. Open a savings account
The personal banker that helps you open your checking account will most likely recommend that you also open a savings account. I highly recommend you do open the savings account so you can start saving for emergencies and the future.
I know it’s very hard to save money when you are young and living paycheck to paycheck. If you have the ability to save between 10% and 30% of your monthly income, please do so.
To make things easier for you, you can schedule automatic transfers from your checking account to your savings account every month. If saving 10% - 30% of your income is going to be challenging, I recommend you save $25 - $100 every month to start.
Another great thing about a savings account is that some banks will let you use it as an overdraft protection. For example, if you had an unexpected bill come through and your checking account became negative, the bank can pull the funds from your savings and transfer it to your checking account to cover the bill and charge you a small fee. Ask your personal banker about it.
4. Sign up for online and mobile banking
To help track activities such as deposits, transfers and withdrawals in your checking and savings accounts, I highly recommend you sign up for online and mobile banking.
With online and mobile banking you can do a lot of things without going to the bank. For example, you can deposit a check using your phone, you can transfer money between your accounts, you can pay or send money to anyone using bill pay, you can review your monthly statements, and so much more.
Most banks offer online and mobile banking for free. Your personal banker should take the time to explain all the benefits of digital banking.
5. Apply for a credit card (unsecured or secured)
While you are at the bank ask your personal banker about the types of credit cards they offer. If you have some credit history, apply for an unsecured credit card. If you are declined for the unsecured credit card, apply for a secured credit card to help you build a credit history.
If you don’t have any credit history, chances are that you are going to be declined for the unsecured credit card because those cards require that you have a good credit score.
But don’t worry. You can build your credit history and increase your credit score with a secured credit card. Simply put, with a secured credit card the bank asks you to deposit some money and then they give you a credit card with a credit limit that equals how much you deposit.
Please keep in mind that not all banks offer secured credit cards and they all have different types of credit products and rules. It’s very important that you do your own research whether it’s online or talking to adults in your life before applying for a credit card.
If you are approved for a secured credit card and you use it responsibly by making your monthly payments on time, over time the bank might be able to give you back the deposit you made, make the card unsecured and increase your credit limit.
I can write about credit cards and credit scores in a whole column and vlog. If I get more questions about credit cards and credit scores, I will cover this topic in a future #AskDanielTrust article and video.
6. Sign up for direct deposit with your job
Technology has made things so much easier. When you go to your new job’s orientation, please talk to your manager or human resources officer about signing up for direct deposit.
Direct deposit allows your employer to electronically transfer your pay into your checking or savings account on the day that you get paid. This is convenient because you don’t have to wait for a paycheck or go through the hassle of depositing the check in your account.
If your employer offers direct deposit, I highly recommend you sign up because it will be convenient and make it easier for you to manage your personal finances.
Most companies and organizations have an internal human resources website where you can sign up for direct deposit by simply inputting your bank’s routing and account number.
7. Sign up for your employer’s 401(k) retirement plan
If your new job offers a 401(k) retirement plan, I highly recommend you sign up for it even though you might not be thinking about retirement right now.
What I love about 401(k) retirement plans or any other types of retirement plans your employer offers, is that most of the time your employer will match the contributions you make to your account.
For example, if you contribute 3% of your pay every time you get paid, your employer will match it by also contributing 3%. Overtime, your contributions and your employer’s matching contributions will grow and it will make a huge difference in your life.
Review your company’s internal human resources website to find out how you can sign up for a retirement plan. If you have additional questions, please talk to your manager or a human resources officer at the company.
The above 7 tips should help you manage your personal finances
Kevin, I hope my answer was helpful to you and other young people from around the world who want to learn about how they can manage their personal finances after securing a job.
Since I talked about ways young people can manage their personal finances in this column and vlog, I want to highlight two organizations that support Daniel Trust Foundation in a very big way.
The first organization is TD Charitable Foundation. This year, TD Charitable Foundation awarded us a grant to support our Financial Literacy Initiative, which is part of our Mentoring Program.
The second organization is People’s United Community Foundation. This year, People’s United Community Foundation awarded us a grant to support our Mentoring Program.
TD Charitable Foundation and People’s United Community Foundation, thank you so much for everything you do to support our students at Daniel Trust Foundation.
Did you find this article and video helpful? If so, please share it on your social media or with a young person who can benefit from reading it.
Do you have any other advice you’d like to add to my advice? If so, please share it in the comments of this article or video. Thank you so much for reading and watching. Stay tuned to next week’s #AskDanielTrust Q&A.
Daniel Trust is President and CEO at Daniel Trust Foundation, an award-winning nonprofit organization that supports young people in the United States and Rwanda through various educational programs and digital campaigns. To support Daniel Trust Foundation's work, please sign up to become a monthly donor by visiting: www.DanielTrustFoundation.org.