Receiving your first paycheck from your first job can be a uniquely rewarding experience. While you may have earned an allowance growing up for doing chores, or run a lemonade stand over the summer, it’s always exciting to see the benefits in actual paycheck form. As you start earning more paychecks and take on more adult financial tasks, such as paying bills, you’ll have to develop skills to develop a budget and build your credit score.
Fortunately, in 2018 we live in a more digitalized world, as developments in tech continue to grow at an unfettered pace. It’s far easier now to develop a strong sense of financial literacy than it was 30 years ago thanks to mobile apps and better banking technology. And aside from tech, there are all kinds of skills young adults need to learn in order to maintain future financial security. Here are a few of the best ways they can get started.
- Use mobile apps to manage your budget. Developing a sound budget is one of the most important skills to learn as you take on your first job. You’re likely starting from the ground up, so to avoid having to clean up a mess years down the road, create a budget based on your current expenses, your take-home pay, and your savings. Apps like Mint, which sends you reminders for your bills and lets you see your credit score in real time, or Wally, which helps you track your expenses by letting you take photos of your receipts, are effective especially with young adults who are more tech-savvy.
- Set up an auto-transfer from your checking account to your savings account. This is an easy one. Once you’ve figured out how much you can budget for savings per month, set up automatic transfers between your accounts so the money will be transferred without you having to think about it.
- Work toward establishing your credit. As you ease further into your 20s, having a strong credit score is important with regards to renting a home and applying for loans. You can start building your credit by applying for a credit card and making small purchases on it, and ensuring you pay off your balance every month. You can also establish good credit by making sure your bills are regularly paid on time.
- Create an emergency fund. You never know if or when you’ll hit some kind of financial dire straits, like losing a job or getting an injury or illness that requires you to take time off of work. The general rule of thumb is to have three to six months worth of pay saved in the case of such an emergency. It’s worth noting the importance of keeping this savings account separate from your regular savings account so the two aren’t confused.