First Job? Time to Manage Your Budget

Getting your first job offer is exciting, it comes with a sense of accomplishment realizing that your hard work at school has finally paid off. Yet, according to the (2016) national statistics the average college student graduates from college with a $37,172 in debt while the average entry level salary is $48,707. These numbers emphasize the necessity of a well-planned budget to account for monthly expenses, debt payments and savings. A good budget serves as a powerful tool to provide an insight as to where your money is invested and setting up large future purchasing plans. Given the breakdown of your spending it may also be easier to see where you may cut expenses to achieve your savings goals.

Creating a Monthly Budget – Income vs. Expenses

1. Come up with a calculation for all sources of income: this item includes your salary, students’ scholarships as well as financial support from your parents.
2. Make a detailed list of your expenses: the list should provide a breakdown of all expenditures on a monthly basis. A complete list is made out of your essential items such as housing, food, commute and utilities as well as those items you may consider cutting in case of a need. The more detailed this list is the easier it is to track and make the necessary changes.
3. Your Cash Flow: The difference between your total income and total expenses serves as an estimate for your cash flow. Using this estimate you may make projections and plan saving accounts for the upcoming year. It is a good idea to go back to your budget every month, make adjustments and make sure you are sticking to the planned budget.
4. Keep Track: Create a monthly excel sheet to document all your projections

When planning your budget it is important to understand the true after tax value of your salary as well as the tax deductible benefits such as the 401K accounts. The after tax monthly salary value of the national average salary ($48,707) in New York City is: $3000. Every dollar spent towards your 401K account will not be taxed and may be very useful for your future.

Tips for Healthy Budget Management

• Automatic Savings – It is highly recommended to allocate 10-15% of your monthly paycheck to a saving account.
• Safe & Liquid Investments
  • Guaranteed Certified Investments – rather than letting your savings sit in your account you may choose to invest in GCI which are slow-growing but very safe and are guaranteed to provide a return for your investment.
  • High Interest Saving Accounts – These accounts do not have any debit card associated with them. However, they are fairly accessible as it takes only few days to transfer money back to the checking account.
  • RRSP – If you are planning on investing towards purchasing your first home you may consider utilizing a Registered Retirement Savings Plan which will allow you to take a tax free loan of up to $25,000 towards a down payment.
• Build Your Credit – having a credit card can be a useful tool for building your credit by paying your balance regularly and on time. In addition, many credit cards provide users with rewords and points you may use for personal spending.

Sticking to your budget requires efforts and dedication but in the long run it pays off as you plan ahead for the future.