3 Personal Finance Questions to Ask Yourself Once You Get Your First Job

So you’ve graduated from school and are ready to start your full-time career. That’s great! Now that you will be making your own money, it’s important to take responsibility for your finances. After all, we don’t want you spending all of your paycheck in one place! Today, I’m going to share with you three important personal finance questions to ask yourself once you have your first job. These questions helped me understand my financial situation better and that understanding drove me to achieve my financial goals early in my career. I hope they help you too!

What Debt Do I Have, and How Can I Get Rid of It?

The debts that you have as you start your career should dictate your money priorities when starting out. Whether it’s student loans or credit cards, it’s important to understand what debts you have to pay and how they will affect your life going forward. While everyone’s situation is different, it’s generally a good idea to eliminate all debt as quickly as possible, or at the very least, to have a plan to get rid of longer term debts like large student loan balances. 

Where Do I Want to Live?

Living expenses will dictate how much money you can use towards your other needs, wants, and long term goals. It’s important to understand two things about your living situation:

Where can I live now? - If you’re reading this, you’re probably some kind of professional who is finishing up their last year of required education. That hopefully means you have a number of support systems that you can use to support your long term goals, including your friends and parents. If you have the opportunity to reduce your living expenses by having a roommate or living with your parents, I highly recommend it. 

Where do I want to live in the future? - Not many people want to live with roommates or parents forever, and it’s important for you to understand what your goals are so you can spend and save your money wisely. Is your goal to eventually own a home? Do you want to live in the city for a year or two? The answers to these questions will help you determine how aggressively you need to save for your next move. 

These are two powerful questions for someone just starting in the workforce because they will serve as the biggest lever for saving money, and the big goal that many people need in order to get themselves to save and invest their money. 

What are my Monthly Income and Expenses?

Now that you understand what debts you have as well as where you want to live, it’s time to put pen to paper and give yourself a budget. By writing down all your income and expenses, you can effectively map out your savings and spending to give yourself a plan on how to pay down the debt, save for a down payment (or equivalent financial goal), and live within your means while doing so. This is the step where many people will realize one of two things: “I need to make more money” or “I need to adjust my spending habits.” However, the biggest mistake that people make on this step is doing it once or not at all. Your personal finances are your responsibility now that you have a full time job, and they require your consistent thought and attention if you want to reach your financial goals. After you understand your monthly expenses, start putting the extra cash away for your financial goals. If you don’t have any extra, it’s critical that you make a change somewhere. 

It’s important to remember that despite the many numbers of blogs, videos, and resources out there to support your personal finance journey, the core ideas are not that complicated. Where most people fail with respect to their personal finances is not taking the time to start asking questions like these when they first get started. Don’t make that mistake!