5 Things You Should Do When You Get Your First Job

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You’ve nabbed your first big job! Congrats! It’s a huge milestone that calls for celebration. You’re finally earning “real” money – what a thrill!

Getting hired for your first job after college is a big deal. But don’t be foolish now that you’re making the big bucks. Setting yourself up for long-term success is essential. Here are five things you should do to get into tip-top financial shape so you can prosper and enjoy that hard-earned cash.

5 Things You Should Do When You Get Your First Job

Make A Financial Plan

The first big step to take once you’ve landed that first “real” job: make a plan for your life and your finances.

I know, BORING. But we all know people who float through life and don’t pay attention to their finances. They don’t have money when they really want (or need) it. That doesn’t have to be you!

Think about what you want for yourself next year. What about five years from now? Don’t just coast and go along with what your friends are doing. Take some time to plan and dream.

Is a pile of student loans crushing you? Is marriage, buying a house, or travel on the horizon? Making a game plan for your life will help you focus on what matters most and clarifies where you are now. Write down your financial essentials (rent, groceries, student loans) and your future goals and prioritize what you want and need to do. Create a monthly budget (which can include “fun” money) and then stick to it. You’ll appreciate yourself much later when you’re sitting on the beach or opening the door to your first house.

Build an Emergency Fund

You’ve likely heard that about half of Americans don’t have enough money for a small emergency. How stressful! We all have to be prepared for those little things that go wrong in life. Do you want a fender bender to rack up credit card interest? A minor medical bill to derail your budget for months?

Everyone needs an emergency fund. Even when you’re just starting and may not be making big bucks, it’s a necessary step. $1,000 is a great starter emergency fund, and you’ll eventually want to build that up to include 3-6 months’ worth of expenses.

Using a high-yield savings account is perfect for this. It helps keep your e-fund separate from your regular funds, plus the higher interest rate helps make your money work for you. So, get a savings account started immediately (like TODAY). It’s super simple to set one up online in minutes!

Don’t think you’re immune – emergencies will hit you, too! While you can’t always prevent them, you can ease the financial burden by socking away cash for those events.

Start Saving for Retirement

What? I just started my first real job, and you want me to think about retirement already?

Yup. You got that right. Starting your first job means it’s the perfect time to start planning for your future. In fact, socking money away in a work-sponsored retirement account is one of the best investments you can make!

Investing for retirement early in your career will set you up for success. Time is on your side, especially in your twenties! The magic of compound interest can turn your $10, $20, or $50 each month into serious money in thirty to forty years! If you save enough, you may even be able to retire early!

No matter how little the amount, when you give money time to grow in a Roth IRA or other investment account, every dollar multiplies. As your income goes up (and as you pay off debt), be sure to increase your investment contributions. And, of course, if your employer offers a 401(k) match, that’s a no-brainer benefit to snatch up! It’s free money!

Pay Off Student Loans Promptly

Another big step on the path to financial wellness is to pay off your student loans ASAP! With average loan balances in the tens of thousands, this aspect of your finances can’t be ignored.

The last thing you want to do is hang on to those babies for the next twenty or thirty years, right? They’ll hold you back from investing and serious fun. So, start paying a solid amount over the minimum on those loans right off the bat. Even an extra $5/month can shave thousands off your loans over time.

The sooner your loans are wiped out, the less you’ll fork over in interest payments. As your income increases, you should increase your monthly payment amount to knock out the debt faster.

Trust me, once your student loans are out of the way, the freedom will be intoxicating. No student loans in your name? Think what you could do with that money!

Act Your “Wage”

As an adult with a real job, you can use common sense with your money and not spend beyond your means. Act your “wage”, not just your age, by living a lifestyle that matches your income and financial situation.

So, your friends are beaching it up in Cancun next spring? That doesn’t mean you should be booking a ticket, too! Your college roomie just got a hot new car? That doesn’t mean you should saddle yourself with those hefty monthly payments.

Go back to that plan you made in the first step, and you’ll see what fits into your budget and what doesn’t. Someday, you’ll probably be earning more money than you are today, but you’ve got to live realistically in the meantime.

Create a reasonable budget that allows you to pay off debt and cover your basic needs. Then – here’s the key: follow the budget! Don’t be swayed into luxuries you can’t afford. (Hint: don’t let credit cards fool you into thinking you make more than you do!).

Some tips for keeping expenses low:

  • Choose affordable housing or split costs by having roommates
  • Drive an inexpensive used vehicle with good gas mileage
  • Make an expensive night out a rare treat that you’ll look forward to
  • Never say “but it’s only $20” (it adds up!)

Final Thoughts

It may feel impossible to squeeze a single dollar out of the budget after all the necessities. But trust me, you’ll thank yourself later if you get into the habit of saving and investing now.

Starting your first job can be daunting but putting a strong financial plan in place will be worth it!

Kate Underwood is a freelance writer and staff writer for Club Thrifty, a website dedicated to helping people dream big, spend less, and travel more.

Tell us your experiences with saving and investing after your first job (and give us your tips!) in the comments below!

Handle Yourself as a Business for True Personal Finance Success

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This is a guest post by Eric Rosenberg, a full-time freelancer and blogger at Personal Profitability. Eric writes about personal finance and entrepreneurship at InvestmentZen, his own blog, and other sites around the web.

If you have trouble managing your money, you are not alone. Millions of people struggle every single day with paying the bills, keeping their accounts straight, and having enough leftover to save for an emergency, let alone retirement.

handle yourself as business

If this sounds like you, why not take a step back and look at your finances through a different lens. If you treat your finances like a business, and yourself like a financial analyst, you may be able to better identify your financial strengths, weaknesses, and put together a plan to enjoy financial success for years to come.

Create Personal Financial Statements

Every business tracks its financial health using financial statements. If you search for your favorite large company’s annual report on Google, you can find its financial statements posted online. To get an idea of what these look like, stop in and check out Google’s latest annual 10-K report here.

Of course, we don’t need to put together a 100+ page detailed report, just a simple one will do. The three primary financial statements you’ll want to look at are the Balance Sheet, Income Statement, and Statement of Cash Flow.

  • Balance Sheet – The balance sheet is a snapshot of everything you have and everything you owe in one place. Subtracting your debts from your assets, you can find your net worth.
  • Income Statement – The income statement shows how much you earned and spent over a specific period of time.
  • Statement of Cash Flow – The statement of cash flow shows how much money came in and where your money went in terms of spending and investing.

If you want to learn more about personal financial statements, check out my guides here.

Diversify Your Revenue

If a company earns a significant portion of its revenue from a single customer, that is called “revenue concentration risk.” It is a risk because a problem with that one customer can completely bankrupt a company or destroy a product line.

For example, GT Advanced Technologies went bankrupt after losing its biggest customer in 2014. GT Advanced Technologies was a primary supplier to Apple for iPhone glass screens. When Apple changed suppliers, it destroyed the entire company’s business.

What would happen if you lost your primary income source tomorrow? For most people, that is a full-time job and losing it would mean a serious hardship. By diversifying your income and investing your time in side hustles, you are in much better shape to withstand a sudden change in income.

Maximize Profits

The root of business is earning a profit. Earning a profit requires earning more than you spend. Businesses and individuals can both utilize a budget to help plan for this goal. A budget isn’t something to restrict your spending, it is about planning and understanding your spending.

It is important to focus on both revenue and expense when budgeting. Don’t look at your income as a fixed number, look at it as something you can grow through hard work and focus. If you do well at your job, you can get a raise. If you do well with a side hustle, you can earn more. That is key to growing your wealth.

On the other side, do focus on big wins for your budget. Saving a few cents here and there is great, but finding recurring costs to cut and major expenses to avoid will have the most meaningful impact on your finances.

Be Your Own CFO

If you can stay focused and treat your finances like a business, you are essentially acting as your own Chief Financial Officer. Mastering your bank accounts, credit and loan accounts, and taking an active role in growing your income while cutting expenses will be hugely helpful in the long-term.

Even if things seem too tough to handle today, creating your personal financial statements will show you where you need to focus to live the life you want. Whether you want to travel more, save for retirement, or just want to feel more confident when dealing with your money, treating your finances like a business is the way to go.

6 Steps to Creating a Successful Home-Based Business

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There are all sorts of people ready to tell you how to be successful at creating a home based business. In some cases, many of the same suggestions are shared.

The following are some standard, but extremely useful steps to creating a successful home-based business.

1. Create a Work Environment that you can Work in

4 Screen Work Station

Imag via Flickr by Martin Terber

It might require purchasing some professional office equipment and furniture, but put together a work space where you feel comfortable and able to function. Be sure the equipment is both what you need and as ergonomic as possible.

You’re going to be spending a good deal of time in this room and you don’t want to suffer because you provided yourself with substandard work essentials.

2. Keep Overhead Costs Low

Depending upon the business you create for yourself, there could be a fair amount of overhead. Keeping the amount of overhead at the right balance is critical. Remember, it’s not how much money you make, it’s how much you keep.

Working from home has its advantages, but preventing bankruptcy isn’t necessarily one of them. You can over extend yourself if you’re not careful, particularly in overspending in technology.

3. Remember to Spend some Time On your Business

Most people work in their business, forgetting to work on their business as well. A home based business usually consists of one person – you. As such, it’s easy to get caught up in the operation – the product or service delivery. But you must also remember to allocate time to working on your business also.

That includes finances, vision, strategy, marketing plans: the infrastructure. It’s the difference between being successful and just making it through each day.

4. Increase Your Skills and Education

If you were in a business working for someone else, you would probably attend training and education seminars. It’s important to keep the axe sharp, and the same goes for home based businesses. Gain as much education as you can; attend groups that focus on the same business as the one you’ve started; even go back to school.

Entrepreneurs are well served by getting an online MBA AACSB. Consider this seriously as its worth more to you to invest in yourself, since in many ways, you are your business.

5. Work on Your Branding

Many home-based entrepreneurs don’t understand the importance of creating a positive, powerful identity for their business. A good brand will include confirming your credibility, delivering your message clearly, motivating buyers, connecting with prospects on an emotional level, and finally, securing user loyalty.

6. You Work From Home – Not At Home

This is hard thing for many at-home workers to put into practice. You may work from your home, but you also live there. Be able to separate the two. Set time limits so that you “come home” and everyone understands that your “at home” time has begun. Keep at home time sacrosanct.

Starting a home-based business can be tricky and requires all the expertise of any entrepreneurial enterprise. Learn from other’s mistakes. Get more education. And have the confidence to push through until you’re successful.

5 Quick Tips to Purchasing the Best Small Business Insurance

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Small business owners have plenty to worry about, and unfortunately, catastrophic events are one of those things.

That’s why all small businesses need insurance. Insurance feels like an unnecessary expense, but it can be the survival lifeline when things get bad. It helps business owners cover accidents at the workplace. It protects a business’ assets if it ever finds itself on the wrong side of a lawsuit and covers any risk associated with the business.

That monthly small fee could cover a significantly higher payout one day. If that day comes, a small business owner will be happy he or she had insurance.

Small Business Insurance

Small Business Insurance: 5 Tips For Choosing The Best

Of course, picking out the best insurance is no easy task. With a myriad of choices and programs out there today, finding the perfect insurance can be like finding a needle in a haystack.

There are countless stories out there of businesses purchasing insurance they think covers them in all situations, then to find out that it doesn’t cover business-interruption, or some other kind of damage.

“Generally speaking, small business owners are not completely aware of the coverage they have or the coverage they need,” Steven Spiro, an independent insurance agent told the New York Times.

So, what needs to be known when purchasing business insurance? Here are two quick items:

  1. What are the legal requirements? Some states require a business carry insurance, just as drivers are required to have auto insurance. Check with a local Small Business Association to see what’s required in a specific state or county.
  2. What type of business do you run? The type of business that an owner runs can determine what type of insurance is required. Also answer how many employees you have and what type of work each of them does. It sounds specific, but knowing this information can help business owners determine which type of insurance is best for that business.

Of course, a main concern about small business insurance is the cost. What is a small business owner to do?

According to a Xero small business guide on business insurance, it pays to shop around.

“Talk to a few brokers to get a feel for the type of coverage available to you and how much it’s likely to cost. If you don’t know which brokers to choose, ask for recommendations from friends and business associates.”

To find good insurance, you’ll have to find a good insurance broker, or salesman.

Independent agents are a good place to start because they tend to work with several insurance companies. And because they are paid on a commission, they’re determined to earn a small business owners’ business. Of course, this can be a little dangerous, because some brokers might play favorites with certain carriers and push a business owner toward a higher priced insurance company.

Once this process wraps up, it’s time to determine the level of coverage and shop around. Here are some tips to remember during that buying process:

  1. Several carriers might offer packages and discounts when buying multiple forms of coverage. Be aware.
  2. Customer service is important. If a business owner ever has a claim, they’ll want to deal with positive customer service.
  3. What kind of reputation does the carrier have? Insurance companies can fold overnight, so go with a company that has a strong reputation.

Picking out insurance can be difficult and cumbersome, but that patience comes in handy in the long run. Doing the proper homework can be a huge benefit down the road.

How to Invest Money and Combat Debt

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[The following is a featured post discussing the idea of investing a small amount of money in order to pay off debt. This is something that I have done with mixed results so far.]

In days gone by, it was commonly believed that the specter of debt could only be overcome by reducing expenditure and committing to a frugal lifestyle. While this remains solid advice, however, it is not necessarily the most productive method in an age of technological advancement and advanced money making opportunities.

Although it may sound a little unorthodox, the prevailing contemporary theory requires individuals to invest capital in pursuit of greater returns. This money can then be used to repay debts more effectively, without forcing households to struggle against a back-drop of austerity and long-term uncertainty.

Debt Investing

How to Speculate and Accumulate: 3 Ways to Spend More and Generate Additional Income

With this in mind, how exactly can modern-day speculation inspire you to boost your income and stave off debt? Consider the following:

Embrace the Financial Markets

While access to the open financial markets was once exclusive to professional traders and large commercial institutions, the development of sophisticated online trading platforms and educational resources have removed many of the pre-existing barriers to entry. As a result of this, numerous markets are now within reach of independent traders with minimal dollars.

This has exposed everyday citizens to a diverse range of financial products and derivatives, from trading forex and currencies to exchanging carbon credits. While you will needs patience and knowledge to succeed, there is ample opportunity to build wealth through this method.

Understand how to Create a Stream of Passive Income

Passive income is a term used to describe capital can be generated without the completion of a direct action or the sale of a commodity. It allows you to speculate and accrue wealth that is entirely separate to what you earn through traditional working methods, which in turn can be used to clear a significant amount of your total debt.

There are several options of this type to suit alternative risk appetites, with the latest high yield checking accounts providing a low-risk avenue for growth and real estate investments available to those with more income and a desire to achieve greater returns.

Do not Underestimate the Rewards of Hard-work

While it may sound old-fashioned and overly simplistic, hard work remains one of the most effective methods of boosting your income and combating personal debt. This does not necessarily mean that you have to work for 12 hours a day in a number of physically demanding jobs, however, as those of you with a viable industry skill can use it to work from home and freelance in your spare time.

Website developers, content writers and software developers remain in constant demand in the current economy, and this has created opportunity for proactive individuals to market themselves as an independent contractor.

As a general rule, speculating to accumulate does require a certain degree of disposable income in order to generate any sort of return. This can be minimal, however, so as long as you are willing to commit this sum in the pursuit of reducing your debt then you can achieve outstanding results over time.