This is the time of year when high school and college graduates find themselves with their first real job. It is a good opportunity for them to ask the question, “Where should my money go?”
I talk about the retirement years and having the funds to live the life you planned for, but I don’t think I stress enough about the importance of saving when you are young. Maybe even start with that first real paycheck. Even in high school, many kids have part time jobs. While it is great to have spending money, it is also good to open a savings account and put some money back, and watch it grow! Definitely after graduation and upon entering the work force full time, it is important to start a savings plan.
There is a 50-30-20 rule that has been around for a while. 50% towards needs – 30% towards wants – and 20% towards savings. Although those percentages may not work for everyone, you still want to create a plan that does work for you and follow it.
Financial success can start at any age. The younger you start, the more successful you will be.
Knowing where your money goes, accomplishes several things. It may resist your urge to overspend. It will help make you conscious of the debt you have and the need to focus on paying it off. It helps you create an emergency fund for unexpected events that may come up. Finally, it teaches you the importance of learning how to save and invest so you can make informed decisions as you grow older and enjoy those retirement years.
For all of those young people entering the work force for the first time.. Congratulations! Good luck and much success as you start this chapter of your life.
