Excellent work! How do you feel about being paid the first time? Trust me, it feels great to receive that money. However, you have to give your money a purpose, or else you will become pretty sad quite soon. After all, you studied for your degree to achieve something. Let us make sure that you will achieve yourself some freedom through your money management.
First, you need to establish your actual net income. It is always nice to get a good salary. Nevertheless, it is your gross salary, and the government knows how to take a part of it. So, you need to know exactly what amount goes to your bank account. That is the one you have to deal with, and all other numbers are imaginary.
Next, write down all your monthly bills which cannot be controlled by you. They may include rent, utility, student loans and even Spotify Premium subscription. All these expenses have to be paid regardless of how much oat milk latte you drink. In case your rent costs you more than 30% of your salary, you need to feel a bit afraid. Living alone might be an option you will be unable to afford at the moment.
Finally, set the size of your fun fund. At the age you have now, denying yourself anything is a surefire way of being unable to follow your budget. You need to allocate a certain sum of money for eating out, entertainment, shopping and any other activities you enjoy. For your convenience, you should use a separate prepaid card like the ones provided by SoFi and Chime. Once the fund becomes empty, you do not have to buy anything else for pleasure. No cheating by using a credit card.
Credit cards are tricky tools. First, never treat your credit limit as free money because it is a loan with a high interest rate in disguise. Second, if you use one, you need to pay off its balance entirely every Friday. It may sound like a hard condition, but it is a necessary one.
Automating your expenses is also vital. You need to transfer some money to your savings automatically every payday. You will find quite reasonable interest rates at Marcus by Goldman Sachs or Ally Bank. Saving money has to be treated as another bill.
Yes, budgeting is boring. It is highly possible that you will mess everything up at least once spending more money on concert tickets, for instance. It happens to everyone, so you should not stop your activities and continue your journey. Your aim is to create habits that will ensure your wealth in 30.
Hey, did anyone teach us this in the school? We got all this calculus education, but nobody taught us how to manage our 401(k). Sounds funny, but it is the truth. However, you are clever enough to learn that on your own. You should find the way which would be comfortable for you whether it be a spreadsheet, budgeting app or even envelope system.