Budget Hacks for the Young Professional

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Ever since we entered kindergarten many of us have dreamt of this time in our life: growing up. Growing up has always sounded so glorious. You finally get to have complete freedom to make your own decisions. This time in your life is now only a blink away and reality is starting to set in. You are now able to do what you want, when you want, and live where you want. You are no longer under the constant watch of your parents or instructors. With that comes the filthy truth you are also now in charge of the bills! We all hope to land a kick ass job right after graduation, and if you did, congratulations! But if you didn’t, here are some budget hacks for you, my fellow young professional, to help you through this transition period until you are the CEO of your dream company.

ONE: I’ll do it tomorrow… I’ll do it tomorrow… NO, TODAY!

If there was a degree given for procrastination, I would have my PhD. You might too, I know, I saw you in the library beginning that case analysis at 1 AM the night before it was due. Sure, I have some success stories that resulted from my procrastination, but I also have a lot of stories I never want to think about again. We do not want our financial situations to look like those failed projects, poor test scores, or garbage papers. Money does not grow on trees people! We cannot wait until the night before we leave the comfort of our college town to figure out how we are going to have enough money to get where we are going, to pay the bills, and to put food in our mouths.

TWO: 9-1-1 I need money, right now!

Emergencies happen, life happens. You can never be too careful. Be prepared so if your nightmares become reality you do not have to worry about how you will support yourself during a crisis period. It is vital to have a savings account with money that you do not touch unless absolutely necessary. It is likely that some of us will get fired, quit a job before we have a new one, have a family or medical emergency, etc. It’s not going to be all smooth sailing from here, we’re going to have some waves come and try to take us down. Let’s be prepared. Let’s not add eviction on top of a job which doesn’t work out. Word of advice: when you receive each paycheck put some of that into your emergency savings account. Put aside enough money that you are building up your account but not too much that you are forced to eat Ramen for every meal. This emergency fund should have enough money to at least support your basic needs for two months. Start this fund today!

THREE: Make budgeting your buddy. 

Set a reasonable budget for yourself and stick to it. This will not be easy at first, but it is going to be an important habit for any young professional. Create a monthly budgeting accounting for rent, utilities, groceries, any basic medical needs, and a little bit of fun money. If you have debt, make sure to have your monthly payments included in your budget. If you do not have debt, consider putting that money in your emergency fund. Write your budget down and track it closely. Insider tip: Excel is an easy tool to help you stay organized and on track with your budget. Start a spreadsheet and update it regularly to make sure you are still within your budget for the month. This could also help you to notice trends in your spending and areas where you could cut down your expenses. There are many apps that can be downloaded to your smartphone or tablet for easier budget tracking. There are so many of these apps that different apps may appeal to different users, so you have to do some exploring on your own to figure out which one works best for you. Here are my top three favorite budgeting apps to help get you started; Spending Tracker, HomeBudget, and Mint.com.

FOUR: Debt free with a degree! 

 You may feel as though you’re drowning in debt, but you’re not alone! You’re a young professional and having debt is normal. The task is to tackle this debt so that it does not impact you for the rest of your life. The last thing you want to be haunting you while you’re trying to get your feet on the ground is the big bad debt! College is expensive, I get it. Let’s take care of any debt you have acquired soon, as in start paying it off NOW! Once you have managed your debt you can begin saving for luxuries such as a Michael Kors bag, a weekend away at the beach, or whatever you wish. Be patient, those things will come over time but your debt has to be taken care of first. Also, be reasonable the point of paying off debt is not to accrue more.

FIVE: Credit cards: your best friend today, your nightmare tomorrow.

Credit cards can be fantastic. It might feel like play money, in-fact you might not even remember that you spent it until the end of the month. Sounds great, until the bill arrives and you were expecting a $75 credit card bill that somehow crept up to $750. If you want to use a credit card for the rewards they offer or to improve your credit, make sure you have the money to pay it off when the bill arrives. You do not want to acquire debt and end up paying interest when it is unnecessary. Credit cards can be helpful when thinking about applying for loans in the future for your next car or your first house, but they can also be so very dangerous if you are not responsible. So be very careful! If you cannot use a credit card responsibly, get rid of it until you are in the habit of closely tracking how you spend your money. Remember: as I mentioned previously, two ways you could track your spending would be through Excel or a financial app that tracks your spending.

SIX: So you’re in love… What about money?

You’ve found the one. He or she is absolutely perfect in every way. Moving in together would help with this whole budget thing too right? Maybe. Here are a few financial issues to consider before you take your relationship to the next level. Do your financial situations and goals match up? Does your partner have debt? If so, how much and is there a plan to pay off that debt? Consider this carefully before you decide to marry your partner and take on their debt.  If you have a serious partner, make sure you are having conversations about one another’s current financial situation and future financial goals.  If you are both on the same page, wonderful! If not, seriously consider the impact of this on your personal future and your relationship. It will be difficult for you to stay focused on your goals when you are around someone who is not as financially responsible.

SEVEN: Grey hair, wrinkles, grandchildren: let’s talk retirement!

Yes, I know, you’re only 20-something. Retirement is so far away but before you know it the time will come. Wouldn’t you rather be financially prepared than having to work forever? Start a retirement fund at your first job. Even contributing a small amount to a retirement fund is a significant contribution to your future. Because retirement funds are not taxed, you often can contribute with minimal impact on your take home pay. The sooner you start, the more security you acquire, so do not delay!

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This blog was written by Anne Hagerty. Anne is a senior graduating from the University of Montana in May of 2016. She is about to take on the real world as a young professional.

  • Great post and so informative! I am going to post it in some of my photographer groups on Facebook!

  • Carol Burba

    A very common sense approach and advice to those future wage earners.

  • amber norris

    Great job

  • Michael

    Good points, especially about starting to save for retirement early on. The time value of money is almost like magic!

    • i’ve heard this somewhere before…

  • Lisa Burba

    Excellent article!! Written so well!! Great information!!

  • Laura

    What a useful information. I would have benefited from some of these suggestions when I was a young professional. I will be sure to suggest this blog to the young adults in my life.

  • Laura Davis

    This blog is so well done! It is interesting, informative, and very creative. My son is a senior in college and I believe he would be well served to heed some of this very solid advice. I absolutely will share this blog with him!

  • Elizabeth

    Thanks for the info! A very informative and quick and easy read!

  • Amanda Vance

    Very good information to know!

  • Lynn

    Annie, you are brilliant and this is so true, I am going to ask my 18 year old son read this as he is about to graduate high school early. He has a goal to go to college debt free, let’s see if this helps. Thank you and good luck to you. Lynn

  • Suzie H.

    Sound advice! I think people of all ages can benefit from this information. I’m definitely going to pass this on to my 27 year old son and 30 year old daughter. It’s not too late for them to be reminded of the importance of managing credit cards and saving for retirement!