You got your first paycheck, hoorah! The first thing you should do now is to throw a party or perhaps celebrate on your own if you prefer that. The second thing you should do is to sit down and make your first budget.
If you have no clue how to do that, don’t worry, we’re here to help you. However, don’t put off making a budget or you’ll burn through many paychecks and realize you don’t have much left at the end of the month.
If you’ve already done that, don’t worry either, you’re not alone. Let’s start right now. Here are some tips to help you get going:
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Figure Out Your Expenses
Your best bet is to start with what you have-literally, pull out your latest bank account statement or your credit card statement online and highlight all the expenses. Many people are surprised at how many things they spend money on in a given month-rent, utilities, credit card payments, groceries, designer clothes they didn’t need but were on sale. The list goes on.
What are Your Financial Goals?
Now that you’ve got all your expenses highlighted, it’s time to think about what you want for yourself in the future. Try to focus on big goals such as buying a house, getting married, studying abroad, or travelling. The other steps will help you get there.
How Much Do You Need to Save?
After identifying your financial goals, it’s time to look at your numbers and figure out how much you’ll need to make the future you want a reality. This number will be very different for everyone—depending on your age, how much you make per year, and the lifestyle you desire.
Experts recommend that 20% of your paycheck should go untouched into your savings account. This figure may seem like a lot, and it will get harder to meet every month. That’s why a good idea is to automate the process with an online savings account.
Some of the best savings accounts in India have innovative online saving tools. Examples include expense trackers, saving challenges, and the option to round off your purchases and save your change on every transaction.
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Set Aside an Emergency Fund
Before buying new things or heading out on expensive vacations, make sure you have a good amount of money set aside for a rainy day. While you’re making your budget, allocate a small amount of money each month to save up an emergency fund.
A good rule of thumb is to save up to three to six months of your living expenses. This should cover food, rent, utilities, and other necessities. An emergency fund will help you stay financially secure if something goes wrong and you need some time to get back on track.
Go for a savings account that offers a high interest rate to take advantage of compounding. Many online savings account providers and neobanks offer high, competitive interest rates.
Make It Work
Now that you have your budget laid out and know what you need to save for, it’s time to start being smart with your money. Find ways that you can cut back on expenses without missing out on the things you love. If you have a little extra each month-instead of buying a latte at Starbucks, use that money to bump up your savings just a little bit more!
The most important thing to remember when it comes to budgeting is that you need to make it work for you. While the traditional budgets out there might not apply specifically to your lifestyle, don’t be afraid to take a few ideas and tweak them into what works best for YOU.