Money Tips for Beginners

Mastering money management as a young professional

On the surface, money management seems easy: Spend less than you make. But as a recent college graduate, I learned there’s much more to it. As I begin my working career and adjust to life after school, I’ve spent a lot of time learning more about personal finances, budgeting, spending and saving.

From creating a realistic budget to building long-term savings, smart money habits today can set the foundation for a secure financial future. Here’s a practical guide of money management tips to help young adults navigate budgeting, spending, saving and planning for what’s ahead.

Budgeting basics: Gain control over your income

By the time you finish college, you’ve likely created at least a basic budget before. If not, don’t panic. Getting started is easy, and you can download our budget sheet and use it as a guide.

A budget is an estimate of your income compared to an estimate of your expenses. However, your budget has to be as specific as possible. Doing so gives you a clear picture of where your money comes from and where it goes, helping you spot waste and adjust more easily.

If you’re making a budget for the first time, try segmenting your budget into some basic categories:

Fixed expenses:

• Rent
• Car
• Insurance

Necessities:

• Gas or EV charging
• Groceries
• Healthcare and medicine

Utilities:

• Electricity and water
• Internet and cable
• Phone

Other expenses:

• Delivery services
• Subscriptions (streaming movies or music)
• Home office supplies, technology and furnishings

If you’re fresh out of college, or your financial situation has recently changed, consider how the expenses within these categories may have changed, too. You may need to build in a category for paying down student debt, or maybe you can eliminate expenses like textbooks. Then, take note of increases and decreases in spending. Think about why these changes happened.

When you make a purchase, no matter how small, you should track it against your budget. Don’t worry about toting around a pen and paper, though. You can create a spreadsheet on your laptop, make a list on your phone’s “Notes” app, or use any number of other digital tools and apps designed to help manage your purchases.

Online banking: Simplify your finances

The increased use of plastic and digital payment methods instead of cash have made trips to the bank few and far between. Meanwhile, most major banks and lenders have a robust online presence, and many have mobile phone apps that make managing your account even easier.

Whether you’ve just opened a bank account or you’re managing existing accounts, there’s never been a better time to do your banking online. You should be able to do a few things online or on your phone, including:

• Deposit a check
• Transfer funds between accounts
• Pay bills and set up automatic payments
• Track spending and balances among accounts
• Monitor fraud alerts and get notifications when you are charged

Keep in mind, it’s important to use a strong, unique password and take advantage of security features such as two-factor authentication to better protect your sensitive information.

Smarter spending: Balance wants vs. needs

Even when you’re following a budget, it can be easy to overspend, especially when you’re filling up a digital cart. Being on your own for the first time can be daunting, and the number of factors that influence when (and if) you should make a purchase may surprise you. Here are a few things to remember when spending your hard-earned money:

• Decide what you need. What seemed essential in college might not matter as much now. Reassess your priorities and avoid impulse buys.
• Watch for hidden costs. Delivery fees, tips and added taxes sneak up on you. Next time you order delivery, compare the subtotal of your food items to the final total to see how much you’re spending on the service.
• Review recurring charges. When reviewing your spending habits, simply take note of your recurring payments. You may notice a change in the amount you’re paying for a recurring service, or even that you’re paying for something you’re no longer using, both of which would impact your budget. Some banks will even alert you to changes in recurring payments that you can manage manually.
• Hunt for savings.There is no shame in using coupons or discount codes. Keep an eye out for the deals that fit your needs, and take some time to browse multiple sites to find the best deal if you’re shopping online.

Financial planning: Prepare for the unexpected

While we hope to never encounter a financial emergency, being prepared is the key to successfully navigating one. How much you set aside for emergency purposes will depend on your income and expenses, so building emergency savings into your budget is a plus, and every cent counts.

Strive to save three to six months’ worth of essentials; starting small is perfectly fine. Once you’ve established your emergency fund, focus on long-term goals. Consider:

• Moving up to 20% of your take-home pay to savings with each paycheck (or as much as you can afford).
• Exploring your employer’s 401(k) or other retirement savings options.

Navigating a new beginning in your life will present its challenges, but managing your finances well and taking advantage of new tools and tech can also create opportunities to help guide you toward financial independence and stability.

By Jake Stevens, GM Financial

Jake Stevens uses his writing skills to help others make sense of complex topics. His second greatest passion, after auto finance, is cheering on the Crimson Tide.