Congratulations on the new job! By now you’ve gotten kind words and advice from your parents that you may or may not remember. While there are many things that haven’t changed since your parents landed their first job, some things have shifted. Let’s take a look at some classic tips to manage a new salary as well as how Millennials can better manage it in today’s financial landscape.
Best Ways to Use Your New Salary as a Millennial
Invest in Your Retirement
There are so many reasons to invest early in your retirement. This is a timeless sentiment. As a younger worker, time and compound interest are still on your side. Every year makes a big difference when it comes to the interest building wealth for you. Learning more about retirement now and avoiding some of the retirement myths can make a big impact down the line as well.
Rather than a pension, you will probably be enrolled into a 401(k) plan. Hopefully, your company offers a matching investment. Make sure you invest as much as you need to at least get the maximum company match. It’s literally free money. Do it!
Pay Off Student Loan Debt
As you invest in retirement, you also need to figure out a solid student loan repayment strategy. Eliminating those loans as fast as possible is the goal. You will pay less interest and have more funds available to funnel towards travel, a house, a car or other big financial goals. It may seem like you can take as long as you want with the low interest rates, but that’s not the case. Try this Student Loan calculator to run the numbers!
A single person has a huge potential for an extra student loan payment regularly. If you have roommates and share expenses, you may be able to make significant loan payments that will drastically cut your repayment period.
Check out this video about the effects of student loan debt on your future.
Live Below Your Means
Now is the perfect time to get used to living below your means. Don’t fall into overspending and luxury habits. Commit to saving and paying off debt to give your future self financial freedom. It’s much harder to downgrade your lifestyle to accommodate budget changes rather than being able to spend or save a little more after budgeting responsibly. The last benefit is a better chance of avoiding any personal credit card debt.
You might consider using public transportation instead of a car, live with roommates or find a less expensive apartment. These types of ideas are fairly common for Millennials and help the budget stretch farther. Tiny houses are another recent trend that is a way to have a home without the complications of a large mortgage.
Budgeting & Technology
Finally, Millennials have the advantage of technology to aid in financial management and advice. Between all the budgeting apps and even plain old Excel, technology is a very helpful tool that didn’t always exist. It’s always great to be able to easily research financial questions, compare different banks and credit unions, or tweet at a respected financial adviser for some financial counseling. Online banking apps are another great weapon to use. Plus, there are plenty of ways to invest in the stock market in the comforts of your own home. Just make sure you have a budget that you follow and adjust as needed.
Don’t listen to the flack Millennials often hear in the news. We are willing to work, to save and to give our time and money for good. Just remember to take advantage of all the financial opportunities that come with a new salary.
Learn more student loan repayment tips and money management from American Consumer Credit Counseling by visiting consumercredit.com.