Establish A Post-College Budget In Just 6 Steps
Congratulations on having earned your diploma and on having received a job offer. This time of life is guaranteed to be exciting.
As you begin planning your next moves, it is vital to have a budget. How do you create a post-college budget? Following are several things that I discovered after having graduated and started my first adult job.
Consider Your Monthly Income
You might have an awesome starting salary, but you should not use this figure to write out your budget. Determine how much you’re going to be bringing in after taxes every month instead. Remember that federal taxes, social security and Medicare are all going to be deducted from your check.
Employees are going to have to pay 6.2% of their wage earnings, up to minimum wage. A tax rate of 1.45% is paid for Medicare. If you are self-employed, however, these rates are going to be double.
Next, figure your federal income tax rate according to your projected earnings. You will be surprised by how much is going to be deducted from your check.
Think About Retirement
Decide how much you are going to invest in your 401k. Will your employer be matching your 401k? Use this match to your benefit as it is included in your compensation. Invest the minimum in order to receive this match.
If you are able to, make an immediate effort to max out your 401k. Should you invest with pre-tax money, this is going to lower the rate for your federal income tax at the year’s end. Always use low-cost funds to invest.
cell phone services, etc. You will have to allocate you monthly earnings for these expenses. Budgets are used to track and manage this spending.
Put aside monies to create an emergency fund. You never know when car maintenance issues and other expenses will arise.
You can also invest in a traditional IRA or ROTH to take your savings plan a bit further.
Creating a solid financial house early in life will assure you of a comfortable financial future.