1. There's a difference between your gross pay and your net pay
Your salary might sound pretty decent on paper — especially if you've never had one before — but keep in mind that number you've accepted (your gross pay) is higher than the amount you'll actually take home (your net pay). Your paycheck isn't just going to you. Portions of it also go toward federal, state, Social Security and Medicare taxes. Other deductions might include health insurance payments and (if your employer offers it) retirement savings like a 401(k) account (if you choose to put money into it; you should). If you aren't sure how much to contribute, plenty of online tools can help.
When all is said and done, you’ll likely pocket only 60% to 70% of your “salary.” Keep this in mind before planning a budget.
2. Stick to the 50/20/30 rule (within reason)
Once you receive your first paycheck, resist the urge to splurge. Instead, sit down with a calculator and figure how much of your check needs to go toward essential expenses, and how much you can set aside for rainy days (emergencies) or sunny ones (fun stuff).
Assuming you (not your parents) are on the hook for your living expenses, some financial experts recommend the “50/20/30 rule”: 50% of each paycheck goes toward non-negotiable “fixed" costs like rent, utilities and groceries; 20% goes toward savings; and 30% is left for things like personal appearance (clothing, haircuts, etc.), travel and entertainment.
Keep in mind that this rule isn't hard and fast, and depends largely upon how much it costs to live in your region. For instance, you'll likely face way higher living expenses if you live in New York City than if you’re in suburban Ohio.
3. You can keep student loans in check with the right payment strategy
If you're one of the 45 million Americans with student loan debt, the 50/20/30 rule can be particularly hard to follow. But with a little strategic planning, you can avoid forking over your entire paycheck to education lenders.
First, look at your loan’s interest rate, and see if refinancing could allow you to pay a lower interest rate over a longer repayment period. Depending on your income, you may also qualify for loan deferment or forbearance. The federal government also offers income-based repayment plans, which limit the percentage of income that qualified applicants have to pay toward their loans. Websites like studentaid.gov (for federal loans) and Credible.com (for private loans) can help you compare your options.
4. You can always find a better deal for cost-of-living expenses
Necessary expenses like rent, transportation and phone bills comprise a large part of your budget, but they aren't set in stone. Just like you’d shop around for deals on a TV or car, keep scanning rental sites like Rent.com, Apartments.com and, yes, Craigslist for more affordable apartments, and check in with your local utilities to see what sort of special savings, discounts or packages they may be offering.
The little things add up too — consider switching to generic household staples when you hit the grocery store, and ask your HR manager if your company offers pretax transportation benefits. Having even some commuting costs covered will save you that much more each year.
5. Tracking expenses helps you stick to your budget
Never have as much money in your bank account as you'd like? Sit down with your monthly bank statements and take a long, hard look at your spending habits. You'll see all the usual monthly bills, but you might notice surprising patterns.
Do you buy expensive coffee more often than you realize, or splurge on new items right after you receive a paycheck? Recognizing — and curbing — these unplanned and impulse purchases can go a long way toward helping you stay at, or even under, your budget. To stay mindful, consider using an app that helps you budget and track expenses, such as Mint, Billguard or You Need a Budget.
6. Overtime pay is your friend
Clocking long workdays for little money? If you’re salaried (vs. paid by the hour) and put in more than 40 hours a week, your employer might be required to pay you overtime, or at least 1.5 times your regular pay. Check the rules at the Department of Labor’s website (dol.gov), and if you qualify, start volunteering to take on additional early or late-night hours.
If you aren't eligible for overtime, your company may offer other benefits to employees who get stuck working late; for example, they might foot the bill for dinner or a cab ride home.
7. Don't ask for a raise too soon — but don’t stop budgeting if you get one
After initial salary negotiations are made (and first-time budgets blown), you might be tempted to ask your boss for a raise only a few months into the job. But unless your responsibilities have increased substantially, it's not usually a good idea to ask for more money until you've survived at least one annual review. Barring an overnight promotion or an extra-generous supervisor, you're likely stuck with the same pay for the next year or so. But once they do show you more money, stick with your budgeting strategy. The more disciplined you stay, the better off you’ll be down the road.