Everyone makes mistakes with spending and saving, especially if you're starting a new job (or your first job). But even those of us who've earned (and spent) a few hundred paychecks in our lives might need a refresher course on the basics of smart budgeting (or at least a kick in the pants to stop with the bad habits already!).
The best way to get back on track with good spending habits is to start right at the source—your paycheck.
1. Don't Blow Your Paycheck Before You Get It
A new job or a big raise is a major milestone and a wonderful occasion to celebrate, but don't spend your money before you receive it. There's a difference between what you were offered at acceptance of the position and what your take home pay, or your total net income, will be after deductions and taxes. This goes, too, for any bonuses you might get along the way. Spending money you expect you'll have is a vicious cycle that's hard—almost impossible—to stop.
2. Always Check Your Check For Mistakes
Whether you're new on the job scene or a boss-lady veteran, we all need to make a practice of looking closely at our paychecks. Everyone makes mistakes from time to time, including human resources and payroll departments. (Some companies outsource payroll. In the case of an error, contact the outsourced company.) You could also stand to periodically go back and check your deductions for your taxes, healthcare and your retirement contributions to be certain it's what you want to deduct. You're human and make mistakes, too.
3. Take Advantage of Employer 401K Matching
If you're lucky enough to get pre-tax, employer-matched 401K contributions, take advantage of them. Putting money into a 401K feels like giving yourself a pay cut sometimes, but rest assured: It's still your money. If you don't start saving now for retirement, you will continue to put it off. It also helps to think of it this way: If your employer matches to your contribution into your retirement savings plan, they're kind of giving you a raise, too. Why pass up free money?
4. Think in Percentages, Not Dollars
When you think about where your paycheck goes each month, thinking in dollars will only make things tougher. Dollar amounts can shift month-to-month for certain bills and types of spending—making budgeting for things like your utility bill tough. When you think in dollars, sometimes your money will vanish before your eyes. Instead, consider budgeting your paycheck into percentages. Many financial experts stand behind the 50/30/20 rule: 50 percent of your money for essentials (like rent and utilities), 30 percent for discretionary spending (dinners out and Netflix subscriptions) and 20 percent for savings. As your salary grows, these percentages will allow you to scale up or scale down according to your lifestyle.
5. Refocus Your Sights on the Long-Term
All the money you'll earn in your life comes from a stream of (hopefully) steady paychecks. So while payday can feel like a momentary blessing to treat yourself with a big night out, remember that the money you get today is also the money you'll need to tap for your long-term goals, too. It's important to make sure that even your micro-spending aligns with the lifestyle you envision for yourself. Treats here and there are good for you, but don't overspend on what won't matter later (do you really enjoy your lunches out?). Instead, invest in your future—when you get paid, you should focus first on paying down your debt and aggressively placing money into your savings. Live your life to the fullest right now, but also ask yourself about the life you want to lead way down the line.