Congrats! You landed your first job out of college! It’s an exhilarating time…getting used to a new, more rigid schedule, (no more mid-day naps or skipping classes!) navigating office politics for the first time, and learning how to squeeze your social life into a short 2-day weekend.
The next year or so is going to be a non-stop lesson in adulting. Here are some tips for maneuvering the first year of the rest of your life.
You’re Moving Up, But Don’t Move Out…Yet.
If you enjoy the luxury of parents who live nearby and are still welcome to live in their home, I cannot stress enough how valuable it would be for you to spend another year living under your parent’s roof. I know, I know…after the freedom of college and the excitement and possibility of living on your own in the real world for the first time…it’s hard to swallow the idea of living with your parents again. But hear me out….
You’ve surely heard before that having 3-6 months of living expenses saved up for a rainy day, a round of downsizing, an unexpected illness, etc. is the optimal starting point for healthy fiscal footing as you embark on the real world. Seeing as you’re likely starting from zero on the first day of your new job – this nest egg is going to take some time and commitment to build up. Throw in the “distractions” of rent, utilities, student loan payments, and the social temptations that your new life will present, (happy hour, anyone!?) and you can see that It’s going to take you months, if not years, to get this financial netting securely under you. (And it’s going to take an unwavering sense of discipline and determination that many people twice your age, lack.)
OR….you could live with your parents for another year and save up nearly all of your first year’s paycheck – building a strong fiscal foundation. By living with your parents, you actually might even find that even after you’ve saved your money, you still have a little fun money to go out and have fun with your friends. As you become more financially confident, you will be amazed as you watch your friends struggling to make it from paycheck to paycheck.
And, in one year, you’ll move out into your first apartment with the confidence that you can weather any storm that may come your way – living the truly independent life that you’ve always imagined.
Get To Know Your Benefits
Your new job will likely offer you some kind of health insurance and it’s important that you understand exactly what benefits that will entail. (It’s also important to OPT-IN. Remember, a medical emergency can be one of the most financially devastating occurrences in a lifetime. Protect yourself with health insurance.)
Disability insurance is often over looked but one of the most important benefits. After all, your ability to earn an income is your most valuable asset. This insurance pays you a portion of your income should you get sick or hurt and cannot work. Take the time to understand the parameters of this benefit and please don’t overlook this opportunity to protect yourself. I know you may feel your youth is immortal, but if you get injured or become seriously ill, your health insurance will only help you cover many of your qualifying medical expenses. Disability Insurance can help cover your living expenses – beyond medical expenses – when you are unable to work. Should such bad luck befall you, Disability Insurance will help you pay your rent, fill your fridge, and keep your electricity on. It is worth every penny. (And, again, a great habit to get into.)
Group Life Insurance
Many employers offer life insurance as a benefit and it’s important to take full advantage of the policy if they do. You may be thinking that you’re too young and if you don’t have dependents, life insurance might feel moot. It isn’t. A life insurance payout can be critical to your surviving family as they arrange for your funeral and take responsibility for any of your unfinished business. (I know that this might sound dark as your life is just starting…but stay with me…)
401(k) Retirement Plan
You will also need to understand whatever kind of retirement savings tool your new job offers. Many companies offer a 401K and some even have matching programs that can help your investing efforts. A regular 401(k)’s contribution are pre-tax but will be taxed when you are living on your money in retirement and a Roth 401(k) is an after –tax contribution now and the distributions are tax-free later.
If your company does not offer a retirement savings tool, then consider opening an IRA to determine if this may be an appropriate retirement strategy for you. It’s also possible to set automatic monthly contributions.
Remember, ABC (Always Be Contributing)! Even the smallest monthly contribution is a great habit to start and has the power to make a big difference in the long run as it will have decades to compound. And, don’t fall into the trap of saying: I’ll start saving when I make more money – even the richest among us worry about retirement savings. It’s never too early to start.
Ask Questions All The Time
Hey. This is one of those periods of time in your life where you will experience an emotional growth spurt. It can be awkward and uncomfortable and exhilarating, and scary. Everyone experiences it at some point. Just enjoy the ride.
You might feel pressure to have all the answers…but that really isn’t expected from you at this point – in the workplace or in life. It’s expected, even appreciated, when you ask questions. Here’s what your employer wants from you: someone who is hard working, fast-learning, happy to do what it takes to get the job done, and cares about the team’s shared success.
Ask as many questions as you’d like. This is the time in your life when your questions will be met and answered without judgment. Take advantage of it.