Dear Carrie: I'm about to graduate from college and have landed my first job. It doesn't pay a lot, but it's in my field. From a financial perspective, what are my first moves? --A Reader
Dear Reader: Congratulations on what sounds like a promising start to your career. And congratulations, too, on wanting to use your money wisely. Your first moves -- both in your career and in your finances -- can be crucial down the road. It doesn't matter how much money you make to begin with, but it can matter tremendously how you use it.
Managing your money starts with your values and goals. But even in a vacuum, there are some financial steps that I consider essential not only for someone at your age -- but for just about anyone at any age.
LIVE WITHIN YOUR MEANS--OR EVEN BELOW
A budget may sound boring but having one and sticking to it is the foundation of smart money management. So even before you receive your first paycheck, figure out how far it will go. Estimate what your take-home pay will be. Then write down all your necessary expenses. Include things like rent, food, utilities, phone and Internet, transportation, medical bills, student loans -- anything that you absolutely must pay each month.
Will your paycheck easily cover these costs? If you think you'll have money left over, don't immediately envision a bigger apartment or a better car. That extra money will become the key to your financial security.
START AN EMERGENCY FUND
The first place to put any money not spent on essentials is in an easily accessible savings or money market account. Ideally, you want to keep enough to cover at least three months essential living expenses readily available so you're not blindsided by an unexpected illness or a change in job status. If you can put aside enough to cover six months, so much the better.
MAKE SURE YOU HAVE INSURANCE
Chances are you'll be able to get health insurance through your employer. If not, look for a low-cost, high deductible policy. With today's soaring health costs, this is a must. So, too, is car insurance. The only other insurance I'd suggest for you is possibly renters insurance. It's typically quite inexpensive and will cover your personal property in case of fire, theft or vandalism.
DON'T BE DERAILED BY DEBT
Credit cards are a convenience -- and a curse. Keep debt under control by having only one credit card, and use it only when necessary. It's much easier to overspend when you just hand over the plastic. Make a commitment to pay cash for most everything. If you do have to charge something, pay the balance off every month.
SAVE FOR THE PRESENT--AND THE FUTURE