Leaving the nest: What to know before starting your career
Every new freedom comes with a new responsibility.
EncyclopĂŠdia Britannica, Inc.
Media Editor:
Miranda Chabot
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EncyclopĂŠdia Britannica, Inc.Want to put yourself on solid financial footing? Start with two simple steps: make a budget, and live within it.Media Editor: Miranda Chabot
Transcript
Youâre out of school, leaving the nest, and starting a new job. Itâs an exciting time to be striking out on your own. But itâs a double-edged sword, isnât it? Every new freedom comes with a new responsibility⊠and most of them are financial. Hey, youâve got this under control. Just take it one step at a time.
Step one? You need a place to live. Before you decide, take a stab at creating your budget. What will be your after-tax monthly income? Try to limit your rent to 30% of your take-home pay so you also have enough for groceries, utilities, transportation, savings, and debt managementâplus save a little room for the fun stuff.
Keep in mind that youâll also have some unavoidable costs even before you start earning money.
And where are those paychecks going to go? Do you have a bank account set up with direct deposit and a debit card? If you donât have a credit card, itâs probably time to get one. The sooner you establish a solid credit history, the better. Use it sparingly and try to pay it off every month. Nothing will steer you away from your goals faster than carrying high-interest debt.
OK. Itâs time for that first day on the job. Before you start work, youâll have a bunch of forms to fill out, beginning with a W-4 and I-9âfederal tax withholding and work eligibility forms. And then thereâs your company benefits package. Do you know the difference between a PPO and an HMO, and what a deductible is? You might also be offered vision, dental, disability, and maybe even life insurance.
If your employer offers a retirement plan such as a 401(k), youâll need to decide how much to contributeâespecially if a match is offeredâand how to invest the money. Read the choices and their associated risks. As a new investor, consider a broad mix of stock and bond funds, or perhaps a target-date fund, which starts with a riskier growth strategy when youâre young but slowly dials back the risk as you near retirement. The sooner you start, the better.
With that, youâre off to the races in your new life! Do your best to keep that budget, and remember to review it at least once a year. Work to pay down any debt you have, then build an emergency fund with three to six monthsâ worth of living expenses.
And be sure to take some time to enjoy the fruits of your labor and your financial diligence. You deserve it! Whenever you have questions about anything money related, visit Britannica Money. Weâve got you covered.
Step one? You need a place to live. Before you decide, take a stab at creating your budget. What will be your after-tax monthly income? Try to limit your rent to 30% of your take-home pay so you also have enough for groceries, utilities, transportation, savings, and debt managementâplus save a little room for the fun stuff.
Keep in mind that youâll also have some unavoidable costs even before you start earning money.
And where are those paychecks going to go? Do you have a bank account set up with direct deposit and a debit card? If you donât have a credit card, itâs probably time to get one. The sooner you establish a solid credit history, the better. Use it sparingly and try to pay it off every month. Nothing will steer you away from your goals faster than carrying high-interest debt.
OK. Itâs time for that first day on the job. Before you start work, youâll have a bunch of forms to fill out, beginning with a W-4 and I-9âfederal tax withholding and work eligibility forms. And then thereâs your company benefits package. Do you know the difference between a PPO and an HMO, and what a deductible is? You might also be offered vision, dental, disability, and maybe even life insurance.
If your employer offers a retirement plan such as a 401(k), youâll need to decide how much to contributeâespecially if a match is offeredâand how to invest the money. Read the choices and their associated risks. As a new investor, consider a broad mix of stock and bond funds, or perhaps a target-date fund, which starts with a riskier growth strategy when youâre young but slowly dials back the risk as you near retirement. The sooner you start, the better.
With that, youâre off to the races in your new life! Do your best to keep that budget, and remember to review it at least once a year. Work to pay down any debt you have, then build an emergency fund with three to six monthsâ worth of living expenses.
And be sure to take some time to enjoy the fruits of your labor and your financial diligence. You deserve it! Whenever you have questions about anything money related, visit Britannica Money. Weâve got you covered.