Are You About to Blow Your Paycheck? Five Don’ts for Young Professionals
“I don’t know what they want from me
It’s like the more money we come across
The more problems we see” — Notorious B.I.G (Mo’ Money Mo’ Problems)
For college students, the school year has come to an end. Trading textbooks for BlackBerrys. Upgrading from Little Caesars to true fine dining experiences. Some are just getting a glimpse of “adulting” for the summer, while others are approaching the beginning of their first gig after undergrad.
Welcome to the world of responsibility. Not to pop your bubble, but life in college is actually much like living in a bubble. Students are shielded from some of the intricacies and nuances of the adult life. After school lets out, the world becomes just a bit bigger. Choices just a bit more plentiful. You start to figure out that “the real world” is more than just the name of a reality tv show.
One of the biggest responsibilities that students approaching internships or first jobs must face is managing money. You’re no longer a broke college student. A handful of you landed plush gigs that reward you with comfortable pay and benefits. It feels like a few extra swipes can’t hurt you. There’s more money in the bank anyway! Yes, but not really.
In “The Millionaire Next Door” by Thomas Stanley and William Danko, the authors talked about three different types of wealth accumulators: the prodigious accumulator of wealth (PAW), the average accumulator of wealth (AAW), and the under accumulator of wealth (UAW). Fresh out of the college life, I’ve seen many interns and recent grads fall into the UAW category. I have horror stories for days.
In your younger years of professionalism, you’re in the perfect position to set healthy financial habits. You’re likely childless, and for the most part, your main job is to make sure that you don’t starve or die. That changes a bit when you get married, have kids, and take on a mortgage. Setting great habits now will help you shape a healthy financial lifestyle as “life” continues to happen.
So what should you do with your job money? There are plenty of things you can do with it. I talk about a few solid financial decisions that you can make with your money in this post. But instead of talking about all the things that you should do, I’ll instead give a list of the “don’t do’s”. I’ve seen friends buy $700 jackets with paychecks and spend hundreds on drinks in one night. Don’t do that. But here’s a list of more “don’ts”.
The List of Don’ts
1 Don’t be “the blind shooter” — create a thoughtful budget. And have the discipline to stick to it. If you don’t have a budget, you’re essentially bobbing for apples with your mouth closed shut. You need something to measure your monthly spending against. Having a budget also makes it super easy to create saving and investing goals. Mint is a great tool. There are plenty of different types of budgets out there. Aim to save a minimum of 10 percent of your income.
“No more parties in L.A
Please, baby, no more parties in L.A., uh” — Kanye West (No More Parties in LA)
2 We all have friends that don’t even remember how much money they spent the night before and are scared to look at their bank account. Nights like this are never good for your wallet. Many don’t actively think about all the money that goes into nights out. Think rides, drinks, food, etc. If you don’t allocate a set amount of money, things can get out of hand. Don’t be that guy with no clue how much he spent last night. He probably spent more than he should have.
“And we stunting like
Gucci Gucci, Louis Louis, Fendi Fendi, Prada” — Kreayshawn (Gucci Gucci)
3 My buddy spent $700 on a jacket. In a moment of weakness, I even bought a $340 belt. When you have money to blow, it’s easy to just blow it. Once again, check out your budget for clothing. Are you staying on target? If not, feel comfortable putting clothes back on the rack. Your pockets will thank you later.
4 Don’t brunch too much — brunching is nice, but brunching too hard and too often can knock you over budget for food. It’s the weekend, and breakfast food is cheap to make. Instead of hitting up the local restaurant, consider cooking brunch with friends. You’ll spend way less this way. Breakfast groceries are pretty damn cheap. And we all know that one of your friends has a kitchen.
“I’m ridin’ round and I’m gettin’ it, it’s mine I spend it” — 2 Chainz (Spend it)
5 So what exactly are you saving your budget for? To spend it later? Nope! There are plenty of cool things to do with saved money. You can create an emergency fund, pay off debt, or get your feet wet investing. I used a portion of my summer money to get my feet wet in the stock market. Find something productive to do with your saved money. It’s not enough to just park your cash just for the sake of saving or to spend it later.
This list could go on and on for days. What are some financial mistakes that you or your friends have made? We all have them. Feel free to comment, share, like, and follow.
Also, if you’re approaching your first job or a summer internship, check out these books. They’ll give you the foundational knowledge to use your money more wisely.