I recently made the move out of my parents after graduating from college.  When you first move out, you want responsibility and the ability to prove that you know what you’re doing.  I was the same way.  One of the biggest responsibilities you’ll have is financially.  Once the paychecks start to roll in, it’s easy to find ways to spend it on things that you don’t really need.  Too easy.  And while there are many lessons to be learned and life, you never want to know what happens when you can’t pay your rent for the month.  So for my guys starting out, here are some guidelines I followed (and am following) to keep myself on track.

Establish a Budget

Forget everything you learned about budgeting and simplify it to a simple science.  Many of us aren’t really good at the whole “make an excel chart with the pie chart with percentages” stuff.  I understand that was me too.  First understand the difference between a want and a need.  It’s really simple actually.  Wants are things that you want but don’t need.  Needs are things that you actually need.  Subtract your needs by the amount you make a month.  And then with the rest of the cash you have left, decide how much you want to spend on whatever.  Taking the time to think about it makes you think a lot more rationally.

Build an Emergency Fund

Most gurus agree that you should have at least 2-3 months of expenses saved up in an emergency fund.  A savings account that you have specifically for emergencies.  Sneakers are not an emergency.  Building an emergency fund will give you the peace of mind that you won’t have to stress about money in case don’t go the way you expected them to.

Focus on Retirement, Now — 401k

Retirement is not something you should be waiting until retirement to think about.  Experts say that you should aim for about 1 million dollars for retirement, however this number really does vary greatly.  What is certain however, is that you need to start saving now.  The power of compound interest deserves a post all in itself and because most regular americans don’t win the lottery or just fall into that much money; it’s a pretty good idea to have time on your side.

Build Credit History

One of my old mentors called credit “a necessary evil.”  I can’t stress enough how true that is.  Credit is necessary because regardless of what you’ve heard from people, you won’t be able to buy everything that you need out of pocket; especially when you’re starting out.  Education, Mortgages, Businesses, and cars are all examples of things that we need credit in order to obtain.  Which is why I listed this; building your credit history has tremendous benefits.

Pay That Debt

I talked about the necessary evil that is credit a couple bullets ago.  But I think that debt is so important I had to make sure I threw this in there. The bible says that the borrower is a slave to the lender; there is no other way to look at. As long as you stay in debt, you will continue to work for the person you’re in debt to.  So as much as it might hurt, just start paying it all back now.  It will be beyond worth it in the future.

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