Financial tips for when you’re starting out
When you’re starting out in a new career, it’s an exciting time in your life with a lot of new responsibilities. Considering how your career will impact your finances is an important step to take. If you’re fresh out of school, you may have student loans to pay off, or a salary that might seem small now but has potential to grow in the future.
On the other hand, there are endless ways to spend your new income — clothes, moving, entertainment, a home office, and more. Here are some ideas to help manage the financial complexities of starting out and make sure you’re headed in the right direction.
Budget realistically
Set up a budget that works with your current income to help you live the life you want now, while also saving for the future. Our research shows that working Americans who have the highest financial and emotional confidence scores put a heavy emphasis on having a realistic plan and sticking with it. With a budget that helps you meet your financial obligations and grows your bank balances as you work towards achieving your financial goals, you can achieve financial confidence.1Your budget should include essential categories like housing, groceries, transportation (either public or your own vehicle), utilities, taxes, debt repayment, etc. Then add in categories for your wants: entertainment, dining out, and travel, for example.
In addition to taking care of everyday expenses, try to pay down outstanding school loans — a little each month — and begin to build an emergency fund to help protect yourself from the unexpected.
Make career planning part of financial planning
With your budget in place, you probably have a feeling for what you could do with more income. As you’re developing your career and taking on more responsibilities consider your finances when negotiating your pay. Eventually, the goal is to build up to a salary that allows you to pursue your long-term goals, like graduate school or a down payment for a house.
Think about new insurance options
As you start a new job, you may no longer have access to coverage on your parents’ plan anymore, so it’s important to figure out what your employer offers and take advantage of getting benefits through work. Look into the details of your plan to understand what’s covered and if you might need extra coverage, like a supplemental health plan, especially if you have a high deductible medical plan.
A potential employer may offer disability insurance. This might seem unnecessary for a young, healthy person, but emergencies can happen. In fact, 1 in 4 workers in their twenties today will have to stop working for a period of time due to an accident or illness.2Disability insurance can help cover a portion of your income during your recovery. Be sure to read the fine print, however, because oftentimes employer policies only cover a percentage of missed income. In this case, look into buying an individual policy. Some individual disability policies even help cover your student loan payments. As a recent graduate, it’s important to protect your income now, when your student loan debt is at its highest.
Take saving seriously
Now is the time to build smart savings habits. With so much of your career ahead of you, you have the opportunity to build wealth through the incredible power of compounding.
How much should you save? Many professionals recommend saving a minimum of 20% of your income.3,4A great way to start is to estimate six months of expenses and save that much as an emergency fund. But eventually, financial professionals recommend you save one year’s worth of your income.
Start saving as early as possible and avoid withdrawing earnings. Set up automatic savings at your bank. Dip into the fund only to deal with unexpected expenses, like your car breaking down or losing your phone, and then replenish it afterwards.
And it's not too early to start thinking about retirement. If your company has a 401(k) match program, take advantage of it.
Ask for help
You might think you don’t have enough wealth to consult with a financial professional. But a financial professional can help you make the most of what you have now and lay a strong financial foundation for the future. It’s an opportunity to have a conversation with someone who can help you step back and see the big picture of your financial life. What’s the best way to prioritize debt reduction? Which income-building strategies are right for you? Could you use the benefits of protections like disability or life insurance? How much of your paycheck should you save for retirement? The answers to these and other questions will help shape your financial future.
You’re just getting started — and with these tips, you can start making financial decisions now that can help shape your finances in the future.
Disclaimers:
1The Guardian Study of Financial and Emotional Confidence™, 2022
2Social Security Basic Facts, Social Security Administration, 2023
3Personal savings statistics, Guardian
4What Is The 50/30/20 Rule?, Forbes Advisor, June 14, 2023
Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.This material is intended for general use. By providing this content The Guardian Life Insurance Company of America and your financial representative are not undertaking to provide advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity..
2023-161991 Exp. 10/25 *pre-approved content*
