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I’ve Got a Job… Now What?

Two friends separately contacted me yesterday with the same question: “I have a full time job now… what do I do?” (They both play the trombone too, it’s kinda eerie.) I understand where they’re coming from. With a sudden influx of money comes this daunting feeling that you should really take control of your finances. But… how?

I’m going to give you guys a warning, though: if you came looking for the sexy answer, you’re barking up the wrong blonde blogger. I’m not going to give you a one-liner like “invest in gold and you’ll be set for life!” Sorry, but I’m going to give you the real down and dirty (that sounds sexy too… but it’s not).

Step 1: The Fun Part
Estimate your income. This is easier to do after your first paycheck, because then you can see exactly what percentage they’ll be swiping up for taxes. But even if you haven’t received that first paycheck yet, estimate away. You can adjust it later.

Step 2: The Depressing Part
Estimate your expenses – a new jobs means they’ve likely changed. I recommend you download and use PearBudget – it’s a free, really easy to use program that runs in Excel. Or, at least use the Pear way of dividing up your expenses:

Regular expenses: monthly expenses that don’t change in amount. E.G. Rent, car insurance, cell phone bill, savings
Irregular expenses: “things that come up a couple of times a year that you know you need to budget for. For example, you know you’ll spend about $1,800 on car maintenance over the year, but you won’t pay it on a regular schedule. So you budget $150 every month into “Car Maintenance,” and then, on some sad day, you’ll have to give the mechanic all that money.” Other examples: gifts, travel…
Variable expenses: monthly expenses that vary in amount. E.G. groceries, dining out, gas for the car…

Step 3: Try Not to Faint
Take your estimated income for one month, and your expenses for one month… and hope that the first one is larger than the second one. Actually, if you included savings in your expenses, they should be the exact same number. But, they probably aren’t. So… “what do I do…”

“…if my income is more than my expenses?”
In all seriousness, this is a question you would probably never ask me. But if you truly estimated all your expenses accurately, and you came up with this, then you do have a problem. I know at least one of you has some hefty credit card debt playing the monkey on your back. And you need to deal with that. For serious!

Don’t put anything more on those credit cards. Not a red cent. Go cut them up, now. I know, I’m a mean Stephanie, and I don’t want you have any fun. Deal with it. Don’t charge anything else until you’ve paid them both off. (Hey, at least I didn’t tell you to sell your trombone!)
Use that extra cash to really, really work on paying down that debt. I’m assuming it’s high interest, and it’s definitely dragging your credit score down at this point. Just remember, if you only make the minimum payments, it’ll probably take you upwards of 30 years to pay off those cards. I don’t know about you, but I certainly don’t want to meet up when you and I are 50+ and find out that you’re still paying off some charge from 2006.

And if you don’t have any nasty credit card debt? Pump up your savings, and feel mighty proud. Also, know that I hate you.

“… if my expenses are more than my income?”
Ouch… but this was always a likely scenario. You’re going to have to cut down an expense. And no, don’t go for the savings first – that’s like sticking a knife in your own jugular. I’m not going to tell you what expenses you should trim, because I know you’re smart, and you’re the one that has to live with the decision. Find some fat, and trim it.

Make sure you do put away some savings, though. Even if it’s just a dollar a week, get in the habit. It takes about 3 months to establish a weekly habit, so by then you’ll have over $12 (whoopee!), but more importantly, a good habit for life.

Step 4: Just Do It
Live your life, track your expenses, adjust PearBudget (or your tracking system of choice) as you go along. There really isn’t any secret formula – in fact, I’m rather sure there wasn’t anything here that you didn’t already know… somewhere in the back of your mind.

Oh, and about that savings: make sure you’re putting it somewhere that beats inflation, like a high yield savings account. You know how much I love ING Direct (aff), but so long as you’re saving, I’m happy.

3 responses to “I’ve Got a Job… Now What?”

  1. 10 Things to Do Before Starting A Business : Step 1 - Millionster.com - Personal Finance, Business, Investing and Life

    [...] against cubicle monkeys by the way [...]

  2. Dividend Machine

    Nice im playing with the (PearBudget ) program.Thanks for posting that!

  3. Alpix

    Live your life, track your expenses, adjust PearBudget (or your tracking system of choice) as you go along. There really isn’t any secret formula – in fact, I’m rather sure there wasn’t anything here that you didn’t already know… somewhere in the back of your mind.