Congrats on your first professional job! A milestone in anyone’s life, getting your first “real” job means you’re not just gearing up for more professional responsibilities, you’re also going to have more financial responsibility. We’re here to make sure you’re prepared for when your new paychecks start rolling in with six tips that will set you up for financial success.
1. Open a Checking Account
One of the first things you should do is open a checking account. If you already have one, great! You're ahead of the game. If you don’t, or you still have one that is tied to your parents’ account, it’s time to go out on your own!
Start by identifying what you’re looking for from a financial institution. Do you want an intuitive mobile banking experience? Do you care more about outstanding customer service? Do you want to be able to access branches or are you okay with a completely virtual bank? Decide what matters to you and prioritize those items.
Next, decide what fees, if any, you are willing to pay for banking services. At this stage in your adult life and career, maintaining a high minimum balance in a checking account to avoid fees, for example, will probably be rather difficult. So, you would want to make sure you find account options that are free or have very minimal fees. Look into what other benefits account holders have access to: does the financial institution refund ATM fees? Do they offer overdraft protection? For example, PSECU offers our members access to 85,000+ surcharge-free ATMs1, free overdraft protection, and completely free checking account services. Other benefits include our free credit score service2, cash rewards credit cards, and low rates on all kinds of loans.
One thing to note when researching: you’ll want to focus on NCUA- or FDIC-insured financial institutions. Those associations indicate that your deposits at a credit union or bank are insured and protected up to $250,0003 per account.
2. Set Up Direct Deposit
Most employers these days offer the option of direct deposit for your paycheck (some even prefer it). One major advantage to this is that you receive your paycheck instantly instead of having to go to a bank to cash or deposit it. Plus, it’s more secure than handling or mailing a paper check.
3. Automate Your Savings
In addition to a checking account, you’ll want to open a savings account. After establishing a savings account, it’s time to start socking some money away in it. When you’re first starting out, you’re probably not going to be swimming in money, but that doesn’t mean you can’t save!
Automating your savings is a simple, easy, and secure way to ensure you are consistently growing your savings. You have two options. The first is to set up a recurring transfer from your checking account to your savings account. The second is asking if your employer can split your paycheck and do two direct deposits - one into your checking and one into your savings account.
In terms of how much you should be saving, there’s no set equation for this. Even saving $5 a week will add up over time. The most important part is that you’re saving. Also, be sure to increase the amount you’re putting in your savings account whenever you get a raise.
4. Check in with Your Budget
Making a budget only matters if you actually stick to it. Once a month, check in with your budget to see where you’re at. Tally your expenses and make sure your budget is both accurate and realistic. If you budgeted $150 for groceries but are consistently spending $200, for example, you need to determine if your budget is realistic or if you can adjust your behavior to stay within your budget.
Checking in with your budget will also help you learn how you spend your money. Maybe you notice most of your expenditures are travel-related costs, or you might realize that you’re dining out an awful lot. This kind of insight will enable you to tweak your budget accordingly so that it allows you to be financially responsible but also have some fun!
Check out our blog post on personal budgeting for even more info.
5. Make a Plan for High Interest Debt
Nearly 50% of people under age 35 carry credit card debt. Credit cards, while helpful for building a credit history when used properly, can be cumbersome, financially, if you begin to carry a balance on them. Credit cards often have high interest rates, making it difficult to pay down that debt.
If you have any credit card debt, you should make a plan to pay it off. Two popular methods are the Snowball and Avalanche Methods. In a recent blog post, we outlined the pros and cons of each.
You can also consider balance transfer options. Transferring your balance from a high-interest credit card to one with low-or-no interest can make paying down your debt much more manageable.PSECU offers two convenient balance transfer options!
Regardless of what method you choose, paying off your credit cards will free up additional money in your budget each month, improve your credit score, and put you in a better financial position.
6. Begin 401(k) Contributions
Many employers offer company-sponsored retirement plans, and some employers even offer matching funds as an employee benefit. Regardless of whether your employer does these things or not, it is never too early to start saving for retirement.
Hop on board with your employer plan, if they offer one, and be sure to maximize the contributions they will match. If you’re flying solo on this, reach out to a financial advisor to determine what retirement account option is best for you.
As you start your professional journey, we are here to help you achieve more. Whether it’s checking and savings account options, credit cards, or financial tips & tricks, we’ve got the resources you need to live a financially healthy life.
1If you use a PSECU debit card at an out-of-network ATM and get charged, we’ll rebate fees on withdrawals up to $20 per month with direct deposit and up to $8 per month without.
2PSECU is not a credit reporting agency. Members must have PSECU checking or a PSECU loan to be eligible for this service. Joint owners are not eligible.
3All PSECU deposit shares, including checking, Regular, additional savings, money market and certificates, are federally insured by the National Credit Union Administration (NCUA) up to $250,000, the maximum allowed by law. In addition to the $250,000 of insurance provided on an individual account or combination of individual accounts, you are also insured up to $250,000 for any combination of accounts you may hold jointly with other individuals.