Here are the seven steps to budget your first entry-level job:
1. Understand Your Paycheck: Review your paycheck to understand your base salary, taxes, withholdings, and any accrued paid time off (PTO). If there are unfamiliar items, consult your HR contact to ensure you're in the system correctly and comprehend your compensation.
2. Maximize Company Benefits: Utilize company benefits and perks, such as retirement contributions, medical insurance, and PTO. Access the benefits manual or seek guidance from experienced colleagues to maximize these advantages, which can include discounts and savings on various activities.
3. Seize Free Money Opportunities: Take advantage of tax-deferred retirement plans and employer contributions. These opportunities offer tax savings and additional savings provided by your company. Ensure you're maximizing these benefits by reviewing your benefits manual.
4. Differentiate Between Needs and Wants: Differentiate between essential needs and discretionary wants, and consider the degrees of luxury within these categories. For example, assess whether certain expenses are essential for your well-being or whether they could be scaled back.
5. Identify Spending Priorities: Evaluate your past year's spending, categorizing items as needs or wants. Prioritize spending on long-term career goals and personal well-being. Automate bill payments to avoid fees and consider allocating funds towards savings goals.
6. Automate Spending and Saving: Use online banking to automate bill payments for fixed expenses and set up monthly transfers to savings accounts. Consult with your payroll department to automate retirement contributions and other savings.
7. Explore Budget Approaches and Apps: Research online budget programs or consider analog methods, such as the envelope system. Seek recommendations from friends and family for budgeting approaches and apps that align with your personality and priorities.
Remember to regularly review and adjust your budget, considering changes in priorities and circumstances. Set reminders to negotiate your salary and review your financial situation to ensure you're fairly compensated.