A new job, a new life, and a new budget
BLACKSBURG, Va., Oct. 24, 2003 – Students graduate from school and become full time employees in the business world. These are important steps toward independence but there is one more step to prevent financial headaches as they start on their own-make a budget for the money.
Many young professionals start their new careers already stressed with thousands of dollars of school tuition debt. They are at the beginning of a career and need a place to live, furniture, and other items to start their careers.
To get started on a good financial foundation, these young people need a budget and here are the steps to start one from Virginia Cooperative Extension specialist at Virginia Tech, Celia Hayhoe.
Being organized is an important part of getting started. Gather each monthly bill including rent, utilities, school loans, credit cards, gas, food, cell phone, cable, insurance and so forth. Read over your checkbook to find what you spend for items such as food, snacks, laundry, etc. If you use cash, you may want to keep a notebook for a month or two so you have a record of your spending. Include estimates of the cost of entertainment and vacations. You know you want to enjoy your life.
Budget in an amount to save for unexpected costs, such as new tires for your car or a new printer for your computer. Don't forget to include money for gifts and other occasional expenses like car license renewal fees.
Add up each cost to know exactly how much money you want to estimate for your budget. If you do this, there will not be any surprises during the month.
Then comes the more difficult part. The next step in a budget is to compare the expenses to the income and bring them into balance. Once you take a realistic overview of your expenses and how you are spending money you can see where you can adjust your expenses.
Then think about your goals. Makes some decisions about what you want in the future. Make goals for the near future such as next year as well as for the more distant future such as retirement.
Balancing a budget is difficult. But when you know your goals you can base your spending on what is important to you. Knowing your goals will help you make some of those hard choices.
Other elements of organization are part of financial planning. Keep the checkbook balanced. Keep notes of ATM and debit card purchases so that they are accounted for in the balance. A monthly calendar showing when bills are due could also allow you to plan ahead for bills that come annually or quarterly to prevent late charges.
Financial success can be an easier with organized plans. People getting started in a first job can prepare for the expected and unexpected costs of living. These plans might help them avoid having to make embarrassing calls to family members, friends, or even banks asking for financial help in future.
Determine where you want to be financially in 6 months, a year, 5-years, and 30 years down the road. Each person controls their financial destiny therefore each person should set goals. Retirement sounds far off when starting an entry-level position but it has been know to sneak up on individuals. People who don't start saving for the future might find themselves in unwanted situations later down their career paths. By starting to save now for long-term goals, you let compound interest and investment returns help you reach your goals.
To make sure that you are prepared as a new businessman or businesswoman, check out the available resources around you. There are many public services that are willing and ready to help out people at little or no cost. Planning a budget at first might be hectic so do not be afraid to ask for help.
Remember there are three steps to successful budgeting: knowing exactly how much money you make, how much money you spend, and what your financial goals are. By knowing these three items and staying organized it is almost impossible to go off track.
Contact: Celia Hayhoe
Apparel, Housing, and Resource Management
Virginia Cooperative Extension
Virginia Tech
(540) 231-3497
chayhoe@vt.edu
Contact: Michael Sutphin
Writer
Communications and Marketing
College of Agriculture and Life Sciences
Virginia Tech
(540) 231-6975
msutphin@vt.edu
Writer: Kristen Alley
Student Intern
Agriculture and Extension Communications
Virginia Tech