When you’re in school the thought of having money – any money – is usually a laughable novelty. What money you do have is usually spent on late night pizzas and scraping up rent. Then when you get out of school and you get your first “real job” where you actually are bringing in a decent paycheck that money goes towards acquiring all the things you couldn’t buy in college. Suddenly you can afford things – you don’t have to shop the clearance rack or order off the dollar menu. Rarely do young, aspiring professionals think about planning their finances because the thought of investing money or saving a portion each month doesn’t seem as important as buying your first brand new car, or closing on your first house. However when you’re young is the perfect time to get familiar with financial planning, and can be done rather easily and in ways you may not have thought of before.

1. Don’t get caught up in what you’ve been denied

When you’re in school and you’re living on Ramen noodles made from a coffee pot (you didn’t do that? Then you were better off than me…) and meager wages from a part-time job, it’s easy to get caught up in the mindset of “I deserve this!” once you start making money. This leads to fancy new cars, swanky living situations, and other luxuries that you weren’t previously able to afford. However before you start throwing money at expensive items you couldn’t buy before, take a step back and realize that the key to a sound financial future is being smart now. Focus on saving money and scaling back on debt before you rush out to buy that expensive new car.

2. Repaying debt from school

The sheer magnitude of the debt acquired to go through school can be overwhelming and it seems like the smart thing to do would be to pay it off as quickly as possible. However before you jump into paying off debt you need to take a look at the interest rates on your debt – if you have a low interest rate then you can pay back the debt over a longer period of time and focus on investing elsewhere, whereas if the interest rate is on the high end it would make more sense to focus on paying off the debt before worrying about other investments.

3. Break it down into 1/3’s

When you do start making a more substantial income try to break those paychecks down into 1/3’s… Save 1/3 of it, spend 1/3 of it, and use 1/3 of it to pay off debt. This way you’re covering several bases at once. It can be hard to put money into a savings account each month, so one thing that helped me was adopting the mindset that depositing money into savings was just another bill I had to pay. By thinking of it that way I’ve gotten into the habit of transferring money over to savings each month without even thinking about it.

4. Plan ahead

You need a clear idea of how you want to allocate your finances so that you can best decide how to save and invest. Do you want to have enough money saved to pay for your kids’ colleges up front? Do you want to retire at a certain age? Do you want to achieve a certain amount of money in savings? Specifically defining your goals will help you figure out the best way to work towards them.

5. Give yourself a limit

Each month allocate certain amounts of money towards different categories. By giving yourself limits on what you can spend you’re less likely to go overboard. Designate a certain amount for groceries, gas, bills, savings, and fun so that you cover all the inevitable costs but you also are able to spend money on yourself. This way you won’t feel deprived and end up going on a spending spree. Taking the time to identify your financial goals is important for everyone – whether you’re bringing in a substantial income or not. Starting out with your financial goals when your career is also starting out will help you gain financial independence and security much quicker than waiting until you’re already bringing in a steady income.

This is a guest post from Laura Backes, she enjoys writing about all kinds of subjects and also topics related to internet service in my area. You can reach her at: laurabackes8 @ gmail.com.