Money Saving Tips

8 Money Saving Tips for Young Professionals

8 Money Saving Tips for Young Professionals
Written by Irina Vasilescu

You’re an idealistic, passionate, eager fresh graduate and you just landed your first job. When you received your first paycheck, you treated family or friends to a round of drinks. You’re excitedly looking for a more upscale apartment, and you can’t wait to go on retail therapy once you receive that shiny plastic card with a huge credit limit.

If you’re a young professional, you can probably relate to this scenario. Although there’s absolutely nothing wrong in enjoying the fruits of your labor, receiving your first paycheck is not necessarily the time to splurge.

In fact, this is when you should learn how to properly manage your money so that you would have something to spend in case of emergencies, and you can start saving up for the more serious stuff – including raising a family and retirement.

For yuppies or young professionals, managing their money is a huge challenge. There are those who are earning an overwhelmingly large amount, that they don’t know how to deal with it.

On the other hand, there are also yuppies who seem to live on a paycheck-to-paycheck basis. It’s not really because they are only earning a minimal salary, but has something to do with being unable to adjust their lifestyle based on what they are earning.

No matter which of these two categories you fall under, it is best to know how young professionals are actually dealing with the task of managing their finances, and which tips you can follow to save those hard-earned dollars in the process.

Top 8 Money Saving Tips for Young Professionals

If you’ve just recently landed a job with a decent salary, here are a few ways on how you can save money as a young professional:

1. Make lifestyle adjustments based on your current salary

Let’s say that you just landed an entry-level position at a mid-scale company in your state. When you were still in college, your parents financially provided for everything you need. Now that you’re living on your own and are supporting yourself, you do not necessarily have to follow the lifestyle of your parents.

If they can afford to take cruises to exotic destinations, become members at exclusive country clubs or regularly eat out at pricey restaurants, it’s because they are already past that stage when they are working for their keep. They have already earned the luxuries that they are enjoying. As a yuppie, you’re still at that level where you need to work your way from the bottom up – so adjust your lifestyle accordingly.

Although there’s absolutely nothing wrong with going out during weekends or buying good quality shoes, you still need to stick to a budget. Don’t buy anything that you can ill afford and while you are still saving up for that dream vacation, enjoy a lifestyle that is fun yet affordable.

2. Know how to handle paying off your student loans

One of the biggest financial responsibilities of those who are fresh out of college is paying off their student loans. For some, it takes years before they can fully pay for their student loans. When you land your first job and receive your first pay check, should you rush through the process of paying off this loan? Not necessarily.

If the interest on your student loans is low and it is tax-deductible, you can afford to not rush through the process of paying it off. The money that you can save can be put towards a house down payment if you’re planning to buy one; or you can save as early as now for retirement.

3. Drive a basic, reliable car

When you’re working, you would need a vehicle to get yourself to and from work. It might be tempting to purchase or even lease a fancy sports car but think of its overall costs and upkeep expenses. Even the car insurance premiums on luxury cars are higher than regular sedans, so think twice about making such a luxurious purchase.

While you are still in the process of climbing that corporate ladder, settle for a basic, reliable car. Learn how to change tires, or tune up the car so you won’t have to spend as much on car maintenance costs. Otherwise, make friends with a mechanic. That sleek red sports car that you’ve always been dreaming about driving can wait, at least until your next pay raise.

4. Never fall into the credit card debt trap

Yet another thing that yuppies would find to be a huge challenge is not overusing their credit cards. Once you receive that shiny credit card from your bank and you learn what its credit limit is, you might be tempted to swipe it for a fancy dinner or a shopping spree. The best way to use your credit card is to know exactly how much you can charge on it each month, that you are able to afford its full payment.

This way, you would not have to spend so much on late fees and penalties. Also, make the most out of the perks on your credit card. If you’re the impulsive shopper type, keep your credit card somewhere inaccessible that you would think twice about swiping it in a store.

5. Pay yourself first

When your salary simply breezes through your palms on a monthly basis because of all the bills that you have to pay, you are not really doing the work for yourself, are you? A good rule of thumb to follow when managing your money is to pay yourself first. Setting aside one-third of your income may not sound feasible, but it actually is. Make this your goal during the first few years of your work.

If you just got a raise, also increase the money that you are paying for yourself. Name the fund and use it for buying a house, buying your dream car, saving up for a month-long vacation or starting a family. You can even use the money as an inspiration to achieve not just your financial goals, but your lifelong goals as well.

6. Save for retirement

Even if you’re still in your twenties, you can already think about saving for retirement. There is no such thing as saving for a retirement too early. The earlier you do it, the more comfortable you will be once you finally get off the workforce.

Ask your employer about how you can set up an Individual Retirement Account or a 401(k) retirement account. A twenty-something who had a head start with a thirty year old when it comes to saving up for retirement will be better off in the long run.

7. Prepare for unexpected expenses

After setting aside funds for your credit card bills, rent, food, car expenses and clothing, make sure to also allot money for unexpected expenses. You will never know when a medical emergency might crop up, or you might even get laid off at your job.

For the latter, it is best to aside three months’ worth of your current salary as living expenses while you are still finding new work if you got laid off or lost your job unexpectedly.

Once you have this, still set aside more funds for unexpected or emergency expenses. Even a little money saved per month goes a long way.

8. Understand how income taxes work

Even before receiving your first paycheck, you need to understand how income taxes basically work.

Based on the amount that you are offered as a starting salary, how can you calculate your take-home pay after taxes? Will the amount be enough to settle all your living expenses, or would you need to take on a second job?

There are many online calculators that you can use which will show you how much you will be left with based on your gross pay, by calculating the taxes.

The same tool can be effectively used for calculating your living expenses if you were offered a higher position, but at a state where the living expenses are higher, for example.

When you understand how income taxes work, you will have a better idea about how you can gain more control of your finances as a young professional.

Another tax-related tip is for you to learn how to prepare your annual tax return yourself. If you’re earning a meagre salary, you might not be able to afford hiring a tax preparer, anyway, so sit down and do your homework on how to file your income tax returns.

A Final Word About Managing Your Finances as a Yuppie

As a young professional, you should take steps not just to guard your wealth, but your health as well.

Find work that you’re passionate about so that you would not dread the thought of getting up each morning to do your job which pays the bills. When you’re healthy and inspired while doing your work, the financial aspect of it will naturally follow.

By keeping the aforementioned tips in mind, you can get a better grip on your finances as a yuppie and live a financially rewarding, happy and fulfilling life.

About the author

Irina Vasilescu

Irina Vasilescu is our crafty designer. She joined the team three years ago and is also involved in the writing process.

9 Comments

  • These are great tips for youngsters. Often times when they get their first paycheck, they want to begin spending and living as luxuriously as they possibly can and that can be costly eventually. Saving is a very important practice and I’m learning a bit of the hard way right now not having money to fall back on. Moreover, as soon as I clean up some financial matters, I’m going to aim my focus right back to saving the way I use to. Out of every income I get, I’m just going to set aside a portion. I’m also going to rid expenses and avoid expenses I don’t need as well. Good article.

    • This is true. Unless you’re as lucky as my friends have been. Or I don’t know exactly if I should say lucky, but I guess they are because they’re making alot of money as 20-year-olds working industry here in Sweden. It’s extremely well paid but the conditions are kind of crappy however.

      Long days and dirty, dirty surroundings, haha.

      My point being, they have actually been able to afford some sort of luxury. 🙂

  • Great tips for new workers. I remember how overwhelming it was to go from college to managing finances on a tight budget with my first job. I’m sure many can learn from these tips. They also apply to everyone, not just new professionals.

  • I think a lot of new workers get sucked into thinking now that they have disposable income they need to spend it all at once. I found that out myself to my cost when I was much younger.

    If I knew back then what I know now, the one message I would give them is to play the long game. You don’t have to have all the bright and shiny toys now. Delay the gratification. They can come later. But you have to think about “later” as it will be knocking on your door before you know it!

  • Definitely great tips for young business people. These kids are so smart — getting positions straight out of college and while they have an awesome education to back their career- they aren’t knowledgeable about being fiscally responsible — which can be a huge problem.

    • And the reason they’re often lacking in financial responsibility is the fact that their parents didn’t teach them sound financial principles or give them proper advice. It’s a problem that has existed for the past few decades, and that’s not going to change anytime soon. It’s an issue that transcends generations.

  • Thanks for the tips! I’m graduating in a few years and to be honest, I’m utterly terrified of going out to the real world and having real adult responsibilities. I shall keep these tips in mind. I’ve seen friends rack up credit card debt and not paying it, and completely destroying their credit rating.

  • Millions of adults could benefit from these same tips, too, to be honest. When it comes to saving money, most tips will apply to all individuals, whether they’re adults or children. Few people will take these tips, which is the core problem in our society today. Younger individuals aren’t being taught solid money saving tips because their parents don’t know those tips themselves.

  • Wonderful article there! I had always saved a third of my salary for unforeseen expenses, saved one-third and spent the remaining for me. I never had to support my brothers or my parents. They were all self-sufficient. I always had a very comfortable life and fully enjoyed the weekends with my colleagues. Very practical tips there!

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