It’s official – You’re employed. Whether your parents were nagging you to get a job or the choice was completely on your own, this is a major milestone. Give yourself a pat on the back!

Now that you have your own income, your first thoughts may be about the things you can finally buy with your hard-earned cash. The latest game system, smartwatch, or your very own car can be tempting.

Before spending, follow these three simple steps to set you on the course of a bright financial future.

Step 1: Develop a Savings Plan

Our society tends to view savings as what is left over after spending. While this is a common thought, it is backward. Don’t save what is left after you spend. Spend what is left after you save!

To accomplish this, there is really only one rule: Pay yourself first.

This means that every time you receive money, whether it is in the form of a paycheck or a Christmas gift, a pre-determined percentage of it will be set aside strictly for savings. No exceptions.

Much like the government takes a percentage of taxes from your earnings, your savings should be a non-negotiable deduction. The difference is, this savings is yours to be used in the future. You won’t believe how it adds up in your savings account over time – especially with the help of interest!

How much should be set aside? The rule of thumb for teens living at home is 50% of your earnings. Why so much? Your expenses are likely the lowest they will ever be. If you live at home, think about the major expenses your parents cover for you now. Housing, utilities, and food will eat away a large portion of your paycheck in the coming years.

Establishing a savings account that pays you for keeping your money there (in the form of interest) is easy. Find the account that is right for you and get started today.

Step 2: Open a Checking Account

Now that you are on the path to successful saving, it’s time to talk checking. You might be wondering if you really need one of these – Does anyone even write checks anymore?

The truth is, this account is very important. Most of your finances will be managed from here. Your checking account is where your paycheck comes in and where your expenses come out. Though it may be rare to write a check, the money can be moved in other ways, such as using a debit card or online shopping.

Like savings accounts, there are many personal checking account options to choose from. Some may have perks like online and mobile banking, cash back rewards, interest, and ATM fee refunds. They may also have requirements such as keeping a minimum balance or signing up for e-statements. Take some time to evaluate your options and make the best choice for right now. You can always change accounts in the future, as your lifestyle and needs change.

Step 3: Track Your Spending

If saving at least half of your earnings seems impossible, start tracking what you are spending. It will be surprising where your paycheck is actually going. Those “on sale” shoes or restaurant dinners can really add up.

Tracking your expenses may sound like a lot of work, but there are free tools available that can make it seamless. You could use a personal financial manager (PFM) that links right to your checking account to track every purchase. It will categorize your spending and tell you if you are on track or not. Alerts can be created to notify you when the spending target has been exceeded. With technology in your corner, budgeting has never been so easy.

Thinking about the future and setting goals will help keep you on track. What kind of lifestyle do you want to have? Defining how you want to live and realizing that your actions today impact that will help you stick to your plan.

Trust us, this pays off. The earlier you start saving, the more time your wealth has to grow. The habits you form today will stay with you for life, setting you up for a future free of financial stress.

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