Got yourself an exciting summer internship? Congrats! But, before you go out and spend all your recently earned income, read on for a few smart-money ideas on what to do with your first paycheck.
Get into the habit of saving money early and you’ll enjoy stronger financial health for many years to come! If you find saving difficult, keep in mind that saving isn’t just an action—saving is a state of mind. Being a good saver starts by not spending for the sake of spending and never buying items simply because you can. Many people put their salary straight into a savings account, then move funds as necessary to a debit account to cover rent, groceries, car payments, and other necessary expenses.
To assist in your savings endeavors, consider opening a high-interest savings account that offers a good APY, so you can earn interest when you save. Watching your funds grow is excellent motivation to keep moving cash into a savings account, rather than spending it straightaway. Check out savings account options from Harvard FCU if you’re interested in finding a savings account with premium APY, no minimum balance, and no monthly maintenance fees.
The best time to start investing is yesterday. The second best time is today! Even if you’re new to the workforce and not able to set aside a huge amount of money, it’s still a great idea to consider investing whatever funds you can. Even a few dollars a month adds up over time. Start by reading about Individual Retirement Accounts (IRAs) which are an easy way for individuals to start saving for retirement in a tax-advantaged way. Younger people often choose a Roth IRA, which offers more tax advantages later on, when the accountholder may be in a higher tax bracket.
On its own, an IRA is simply a savings account—but accountholders can choose to put their IRA funds into any investment vehicle they choose. This could look like stocks, bonds, mutual funds and more. The right investment strategy depends on your age, income and financial goals. Keep in mind that all investing carries some level of risk, and it’s always a good idea to consult a financial advisor before starting any investment strategy. For a few ideas on low-risk investments, click here.
How do you grow your savings, reduce your debt and get to where you want to be financially? There’s only one way to do it: budgeting. Everyone has their own budgeting style and there are thousands of budgeting ideas online, but the basic principles are always the same. Calculate your income, list your expenses, and plan all spending at the beginning of the month. There are apps to help you do this, or many people like a simple pen-and-paper budget to manually record money coming in and out.
Budgeting is particularly important if you’re managing debt or saving up for a big expense, such as a move or a house. Making a monthly budget helps you to reduce impulse spending, so you can put more
funds toward student loan payments, credit card bills or a future mortgage. Seeing your actual spending and saving on a budget works wonders when it comes to encouraging more saving! And, if you’re looking for a heap or budgeting tips, tricks and information, head to the Harvard FCU blog.