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Entering the Workforce? Give Your Finances the First Promotion

Personal Finance
two female and three male young adults fill out job applications upon entering the workforce together

Have you just landed your first full-time job? Congratulations! While you may have first-day jitters, you have also reached a major life milestone. But as you work your way toward career success, have you also considered your finances? They might deserve the first promotion.

Getting your finances in order before entering the workforce could be the first step toward financial success. Examine these tips as you transition into the working world — they could help you get your money on the right track from day one.

Bank on the Right Bank

Your finances could get a little more complicated once you enter the workforce, so finding a bank you like could help you build a strong financial foundation. Are you happy with your existing bank? If not, do some research to see if another bank might serve you better. Now could be the perfect time to switch to avoid any complications down the road.

Don't know where to start? Here are some factors to consider when choosing a banking institution:

  • Does the bank have helpful customer service?
  • Is the bank's online banking experience easy to navigate and use?
  • Does the bank have a mobile app?
  • Do the banking representatives focus on education — or product upsell?

Pay Yourself First

You might also open a savings account. After all, life isn't just about making money — it's about keeping it too. Once your first paycheck hits your checking account, consider setting up an automated monthly transfer to your savings account. This could help you start making progress toward your big financial goals right away.

If you start saving starting on your very first payday, you likely won't notice the difference — and could benefit from establishing a saving habit from the get-go. It could be harder to curb your spending later (once you get used to spending your earnings). By paying yourself first, you just might set yourself up for financial success.

Take Advantage of Company Benefits

Sometime during your first days or weeks at your new job, you'll meet with someone from human resources to select your benefits. This is an important process, so it could be helpful to know what you might expect.

Here are some of the most common company benefits:

  • Employer-sponsored retirement accounts: Does your new company offer a retirement account like a 401(k) or 403(b)? If so, you could consider opening a retirement account through your company — especially if they offer a matching program.
  • Health insurance: Your company may provide health insurance. Depending on the policy your company offers, it could be less expensive than buying health insurance on your own.
  • Life & disability insurance: Many employers offer basic insurance policies, such as life insurance and disability insurance, that are generally affordable for entry-level workers. These insurance policies could help protect you, your loved ones — and your ability to earn an income.
  • Other savings vehicles: Do a little research to determine if any additional savings accounts related to health care costs, such as flexible spending accounts (FSAs) or health savings accounts (HSAs), could work for you.

Set Goals & Create a Budget

You may already know what your wages or salary will be, but remember that this number is your gross pay. Your take-home pay will be a little less, since deductions for taxes, retirement account contributions and insurance premiums may be automatically withheld. However, once you know your take-home pay, you could create a budget around that amount.

If you would like to pay yourself first, you could start by accounting for how much you plan to save per month. That could mean setting goals and knowing what you want to save for. Then, look at how much you have to spend each month on needs, such as rent, utilities, groceries and more. It might be smart to leave your discretionary spending (i.e., your "wants") for the last part of your budget.

It's often easier to reach financial success if you're willing to prioritize your savings, spend less than you earn and live within your means. And once you have your budget, you could think about tracking your expenses to know exactly how much you spend — and how you spend that money.

Make a Plan to Repay Debt

Do you have any debt? If so, it could help to make a list of those debts — such as loans or credit card balances — including how much you owe and the interest rate for each account. From there, multiple strategies could help you pay off debt.

For example, you could order your list by the highest interest rate and think about paying off the account at the top of your list first. Why? Because that's the one that costs you the most money in interest. This could mean that your credit card (with the 20 percent interest rate) would be prioritized before your student loan debt (with the 5 percent interest rate).

You could also pay off accounts with the smallest balances first to give yourself a series of small "wins" that could help keep you motivated. Either way, continuing to pay the minimum payments on all of your debts could help you avoid racking up fees and more interest.

Starting your career with a strong financial foundation could put you on the right track for tomorrow. Giving your finances the first promotion could help you reach your financial goals — and set you up for success.

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Information provided is general and educational in nature. It is not intended to be, and should not be construed as, legal or tax advice. Western & Southern Financial Group and its member companies (“the Company”) does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.