Working in tech provides many benefits and your job situation is likely secure, so there is no better time to get your financial health in order. This may not be the most exciting thing to do with your time, but it will pay off down the road.
Understand Your Retirement Package
The earlier you start saving for retirement the better prepared you will be, according to NYTimes. Investing early gives your money more time to grow. Take time to look over your company’s retirement package. Ideally, you will contribute the maximum amount possible to your retirement package each year. If that isn’t possible, at least plan on contributing the maximum amount that your company will match. If you don’t do this, you are leaving money on the table. Once you set up your retirement account, it is best to forget about it. Checking it too frequently will only create stress. Reallocating funds in an attempt to chase the best growth is also a risky game. If you want to have a more hands-on investment account, set up a separate fund. Your retirement account is for long-term growth.
Build an Emergency Fund
Once you start making a solid salary, lifestyle creep can be a concern. When you have enough money to easily pay your bills, it can be tempting to step up to a fancier car, more exotic vacation, or routine shopping trips. While there is no reason to live like a pauper, it is important that you not get caught up in your lifestyle that you aren’t saving money. An emergency fund with three to six months’ living expenses gives you a cushion should the unexpected happen. This money will come in handy if you lose your job, but it is also useful for handling emergency expenses that crop up.
If you need work on your car, your dog needs surgery, or something else happens, you have cash on hand. This prevents you from putting the expense on your credit card. Having to put unexpected expenses on credit cards is a common way to end up with credit card debt. Keep your emergency fund in a high-yield savings account not attached to your day to day bank. This makes it less likely that you will use the money for an impulse purchase but it will be easily accessible when necessary.
Boost Your Financial Independence
Managing your finances is one way to feel that you have gained financial independence. If you or your parents are still paying your student loans, this is the time to fully take over this responsibility. Refinancing your student loans is a great way to save money, and has other benefits as well. Refinancing your loans allows you to remove your parents as cosigners and consolidate all of your loans into one monthly payment. Now is also a good time to make a break from the family phone plan and other expenses that you perhaps haven’t taken on yet. Establishing yourself as an adult means having your finances in order, and taking these steps will be beneficial not only to you but your loved ones as well.
