Financial tips for young professionals
It’s hard to think about good things and rational decisions regarding money, especially to a young professional. Young adults are known to splurge on things they do not need once they start earning, and the first salary often could end up a nightmare.
A study shows that 51% out of 100 young adults splurge their money on traveling, while the remaining 49% mostly spend it on alcoholic beverages and fancy dinners. Young people have doubled their spending on unnecessary things since the pandemic, and it is getting out of hand as the years’ pass.
Most young adults who have experience earning for the first time like to show off, especially on gadgets and trips – basically anything they can flaunt on their social media accounts. While it’s okay to allow yourself to enjoy and have fun while you are young, it is not okay to spend your money up to the last penny and not have anything left for your basic needs. Uncontrollable spending habits can bite you back sooner or later, so while you are still young and healthy, make sure you always save something for yourself before buying the new iPhone.
So if you are a young professional who doesn’t have a sense of direction when the topic is money, here are some banking tips for you:
- You don’t need a new phone
Do you know where most young adults spend their first salary on? If it isn’t for free trips, they probably bought a new phone. Most young adults think that once they start earning, they need the latest iPhone model to match their professional lifestyle. If your smartphone is still functioning like how you need it to perform, then stop searching for the newest iPhone. You don’t need a new phone.
- Keep track of your spendings
You may think that since you are not spending big, you still have some money left but lo and behold, your bank account is almost empty. Sometimes we spend more frequently when we know that we do not pay big. However, those small spendings accumulate until you realize you do not have any more money. If this happens all the time to you, then it’s best to keep track of your spending by making a list to know where most of your money goes.
Keeping track of your spending will also help you budget for the next few days because you will know the leading cause of why you ran out of money.
- Budget your salary the moment you receive it
More often than not, when we get our salary, the first thing we do is spend on food or spend it by going out with friends. If you can help it, cut that habit. One way to save money is to divide your salary to your specific needs before you spend on other stuff that is lesser important.
You can do this by keeping an envelope or a bag with many pockets, then budget your salary according to your needs—for instance, groceries, utilities, water, gas, work lunch, vitamins, etc. Budgeting your salary like this allows you to know how much you should only be spending on each specific category so you will avoid overspending. Doing this will also help you have a limited budget for unnecessary things.
- Start saving up for an emergency fund
An emergency fund is probably something that most young professionals do not think about, because it sounds so much like an adult thing that they get intimidated by it. You might now be aware, but having an emergency fund can prepare you for worse-case scenarios, like suddenly losing your job to unforeseen circumstances, getting hospitalized, calamity, etc. An emergency fund will prepare you for things you do not know that can happen to you.
Your emergency fund should cover three to 6 months’ worth of your expenses. Aside from an emergency fund, you can also start trying to earn in some other ways, and Sonary has lists of software solutions that can help you earn on the side.
- Erase the mindset “you deserve to treat yourself.”
The statement is true, but sometimes this mindset becomes your reason for spending too much, and it is not healthy. You deserve to treat yourself once in a while, but not every day.
When young adults spend big, they will think that it’s something they deserve to justify their spending.
- Do not spend what you don’t have
Young professionals who spend on gadgets the moment they get their salary is someone who spends more than what they have. It is the general rule of thumb when it comes to finances that you should not spend more than what you can pay for, or you will drown in debts.
Conclusion
Nothing will beat the classic “self-control” regarding spending, but following these tips will help you save more and prepare you for what the future brings.
Remember that you can only be the one to discipline yourself on how you handle your finances. It’s just a matter of the willingness to be punished, or not.
