You just landed a new job and you’re all excited. Now what do you do? Here’s my advice:
1. Take a deep breath.
2. Tell yourself that you are NOT going to make any unnecessary lifestyle upgrades. Go ahead and say it now. The temptation to treat yourself will be HUGE – especially if you just graduated from college. My advice is to avoid this at all costs. Practice some restraint. You will thank yourself later! I promise.
3. Find out about your new company’s retirement plan. Do they match? If so, how much? How soon can you join the plan. A lot of comanies make new employees wait a year before the company will match. I think this is stupid. If your new company doesn’t allow contributions or doesn’t match for the first year, set up a Roth IRA as soon as possible. You don’t want to loose out on your first year’s contributions. What you want to avoid at all costs is getting used to spending everything you make.
4. Sign up for your employer’s health insurance program as soon as you are eligible. You don’t want to be without health insurance.
5. Make a budget. Be sure and factor in your 401(k)/Roth IRA contributions as well as your health insurance premiums. If you have student loans that will need to be paid back, factor them in too. Also make sure you have money to fund an emergency fund (anything is better than nothing).
6. Take a look at your wardrobe. Chances are, you will need to upgrade it. Make sure you have room in your budget for a clothing allowance. Setting aside money regularly to upgrade your wardrobe will allow you to plan ahead. For instance, at the end of winter, you can stock up on merchandise that is reduced to make room for Spring and Summer clothes. You can easily save 50 – 75% off regular retail prices. If you pay full-price for clothes, you are only hurting yourself.
7. Start saving money for a house. Even if it is a small amount, start saving now. Set up a savings account with Emigrant Direct or ING Direct and have your “house money” automatically deposited. You’ll be amazed at how much you can save up in just a year or two.
8. Don’t buy a new car! This goes along with point number two. Trust me on this one. You don’t want to take on any more debt than you absolutely have to. If you have to have a car, buy a used one. You can always upgrade later. Remember to factor in maintenance costs before you buy. The more common cars like Ford, Chevy, Honda or Toyota are going to be cheaper to maintain than a BMW or Mercedes. Also, you don’t want to trap yourself into always buying “status.” Like I said, you can always upgrade later.
There’s other stuff to think about. However, you won’t go wrong if you pay attention to the eight points I just mentioned. You might also want to pick up a copy of Suze Orman’s The Money Book for the Young, Fabulous and Broke! and Jane Bryant Quinn’s Smart and Simple Financial Strategies for Busy People.