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You’ve gone through the gauntlet of filling out job applications, perfecting your resume, writing cover letters and interviewing and you finally got a call back with good news: you’re hired! Pop the champagne, baby! It’s lobster and caviar from now on! You’ve got a job!
Well, hold up.
You may have secured a new — and better-paying — job, but significant lifestyle changes are not always the best idea. You should still consider a few things before you go on a spending spree.
You May Have a Job Now, But You May Not in the Future
Jobs come and go. This one is better-paying or more suited to your background, but doesn’t ensure you will be employed in the position forever.
Getting laid off sucks and should never be the first thing on your mind, especially directly after accepting a new job. However, blowing your money can result in some messy situations if you have the misfortune of being let go. Likewise, you may eventually realize that this job is not for you or decide to start your own business or change your field. Having some savings will help in these situations.
Upon securing a higher-paying job, you probably have the opportunity to put aside more money for the above situations. It’s also possible to invest in mutual stocks and other safe, reliable forms of monetary investment that will make you some money over time.
Student Loans Still Exist
If you’re under 30 and have graduated from college, you probably have loans to pay. Depending on the plan you’ve chosen for repayment, you’ll be paying these loans for upwards of a decade, and if they are income-based, repayment depends on the amount of money you are making.
Getting a new job should boost awareness on both these ends. You will be able to pay off your loans quicker than previously, but you will also owe more each month once your next tax return rolls around.
Paying off the highest-interest student loans — some of which hover around or above 6 percent interest — should be a top priority. Once you get out from under the shadow of student loans, you’ll have plenty of chances for leisure-based spending.
Nobody Knows What They’re Spending
At least not without monitoring their cash flow and setting budgets. Small purchases add up and large, necessary investments — especially for vehicles or home repair — can take you by surprise. Having an understanding of your spending habits in relation to your paycheck is the single best way to budget money for the major surprises.
Setting a specific spending goal for each month can help you understand where the majority of your cash goes and helps regulate the amount that stays in your bank. You may be surprised how much you’re spending on small luxury features — online subscriptions you’ve forgotten about, bar tabs, etc. — and be able to eliminate some drains on your finances immediately.
You’re Making More Money: Spend Some of It
While you’ll need to make a lot more money before you can modify your lifestyle, having a better job shouldn’t only be scrimping and saving. Carefully consider buying a few major luxuries that will make you extremely happy. Maybe you always wanted a nice car or a boat. Don’t just throw down cash just because you can. Put down 10 to 20 percent and then finance the rest. That way if you need the extra cash in a pinch, you have it.
Keep in mind that these purchases should be just as budgeted and well-thought-out as any other part of your financial plan. If you have just started working a new job, don’t potentially plunge yourself into debt with crazy purchases. A couple planned large purchases can be great, but it’s the several medium-sized ones that can start to really add up. When planning for your purchases, you need to take into account all the peripheral costs as well: insurance payments, the prices of gas and supplies, food, etc. All if this should be planned out so no further payments or bills mess with your financial well-being.
Spend Wisely
If you like your new job, it’s likely you’ll be working it for a while. Getting into a rhythm of good financial habits should be your first priority. Life is full of surprises — some good and some disastrous — and sound financial footing can go a long way in keeping you stable through them all.
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Photo provided by the author.
The post How to Be Smart About Your Money When You Get a Good Job appeared first on The Good Men Project.
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