It’s the unofficial start of summer, although I’m sure it doesn’t feel that way. Nevertheless, the season is marked with indulgences, travel, colorful experiences that will create memories locked away in photos that people will look back with fondness.

But before everyone gets into the delirium of summer, think about your summer job. Are you going to save or spend your paycheck? Should you buy that cute top or should you save the money for the weekend? Where should you go on vacation? Should you get a credit card? How much should you be spending on rent?

If you’re stressed at those questions, you’re probably like many of us who had no idea what to do when we started making money. We spend years in school with a curriculum created by people who should probably know the importance of managing personal finances, yet they never dedicated to helping students learn how to effectively manage their money when they start making it. You won’t find these teachings in schools or in any new job training.

But don’t worry. We got your back. Here are a few things to keep in mind when you start making money:

 1. 50/30/20 While many personal finance advisers argue about how much to spend, many experts–including Elizabeth Warren–agree you’re safe by following the 50/30/20 rule of a paycheck and budget. This means 50 percent of your paycheck will go to paying your necessities: food, credit card bills, gas, rent, etc. 20 per cent goes into saving. And 30 per cent will be your “fun money.” This could be clothes, shoes, makeup, going out to eat, drink, anything you want to do but don’t need to do.

3. Emergency Fund- Again, a bunch of personal finance advisers differ on how much is a good amount to save for your emergency fund. However, in light of the current pandemic, it’s probably best to play it safe and save about six months of all your regular expenses to fall back on in case you need it. So spend a little time doing the math and keep it there for future emergencies… hopefully not another pandemic.

 

5. Rent- Maybe you just got a new job and you’re dying to move somewhere on your own. Maybe you’re looking at your paycheck and seeing the possibilities of what you can afford and not knowing where to start. Many realtors will say they’ll approve you at 40 percent, but to be safe, people say it should be 30 percent of your monthly income. This will give you a nice cushion to allow other debts to still fit in your 50/30/20 budget and let you breathe every month. 

2. Saving- Every boring adult has probably told you that you need to save money, but they never told you how, why, for what, etc. Now that you know you should be saving about 20 percent of your check, it’s a good idea to move this money into a different bank account in a different bank. A perk of a designated savings account is the ability to add compound interest–basically means the bank just gives you money for saving it there. Saving it in a different bank means that you can’t easily transfer it into your regular debit card and makes you think twice before you spend your savings.

4. Credit cards- There are a lot of fears around using credit and having credit card debt. It’s good to have a healthy amount of hesitation to use these credit cards, helps you from going overboard. But there are definite benefits and perks that come from being able to use credit well and it opens the door for future purchases. But what’s too much credit? While the science behind determining your credit is a bit of a mystery, many places say to stay within 30 percent of your line of credit. Obviously, always pay on time.

@riviersneda

 1. 50/30/20 While many personal finance advisers argue about how much to spend, many experts–including Elizabeth Warren–agree you’re safe by following the 50/30/20 rule of a paycheck and budget. This means 50 percent of your paycheck will go to paying your necessities: food, credit card bills, gas, rent, etc. 20 per cent goes into saving. And 30 per cent will be your “fun money.” This could be clothes, shoes, makeup, going out to eat, drink, anything you want to do but don’t need to do.

2. Saving- Every boring adult has probably told you that you need to save money, but they never told you how, why, for what, etc. Now that you know you should be saving about 20 percent of your check, it’s a good idea to move this money into a different bank account in a different bank. A perk of a designated savings account is the ability to add compound interest–basically means the bank just gives you money for saving it there. Saving it in a different bank means that you can’t easily transfer it into your regular debit card and makes you think twice before you spend your savings.

3. Emergency Fund- Again, a bunch of personal finance advisers differ on how much is a good amount to save for your emergency fund. However, in light of the current pandemic, it’s probably best to play it safe and save about six months of all your regular expenses to fall back on in case you need it. So spend a little time doing the math and keep it there for future emergencies… hopefully not another pandemic.

4. Credit cards- There are a lot of fears around using credit and having credit card debt. It’s good to have a healthy amount of hesitation to use these credit cards, helps you from going overboard. But there are definite benefits and perks that come from being able to use credit well and it opens the door for future purchases. But what’s too much credit? While the science behind determining your credit is a bit of a mystery, many places say to stay within 30 percent of your line of credit. Obviously, always pay on time.

@riviersneda

 

5. Rent- Maybe you just got a new job and you’re dying to move somewhere on your own. Maybe you’re looking at your paycheck and seeing the possibilities of what you can afford and not knowing where to start. Many realtors will say they’ll approve you at 40 percent, but to be safe, people say it should be 30 percent of your monthly income. This will give you a nice cushion to allow other debts to still fit in your 50/30/20 budget and let you breathe every month. 

If you’re upset no one taught you this, you’re not alone. Hopefully this helps some of you graduating high school, college, or maybe starting your own job get better control of your finances. Knowledge is power, having power over your finances will help relieve some of the unnecessary stress of the list of things you’re supposed to know but no one ever told you.