I loved budgeting and financial planning before business school, but once the cash stopped flowing during those two years, it was a lot less fun. I started working again this summer and have spent time recently whipping my finances into shape. This post is a summary of many of the things you need to do or think about after business school to get your finances back in shape.
Remember, I'm not a financial professional by any means, this is my personal opinion and not that of an expert. Though, I have included some ideas from many of my brilliant classmates from the BYU MBA class of 2014. Hopefully this post will give you some things to think about and link to some resources that will be helpful.
Here are some tips to get back in shape. Not in order of importance.
#1 Maximize your use of all the benefits at your new job. Read the fine print of the benefits package. Can you expense your cell phone? Home internet? Gym membership? You might be surprised at some of the lesser known benefits that will help your bottom line.
#2 Live like you are still a student. This one is hard. Once you get that first paycheck you can all of a sudden remember lots of things that you can't live without. The longer that you can live like a student, the better. Money should always feel a little tight, no matter how much money you make, if you're doing it right.
#3 Use online tools like Mint.com to track spending. Which tool is not as important as having some system that lets you see your finances aggregated across all different types of accounts. If you can't easily answer these questions below, then you really need one.
As of today, what is your net worth?
How much do you spend a month on average?
How much in fees have your banks been charging you this past year?
#4 Save money. Most "experts" recommend you try to save 10-15% of your salary. You should have a set amount each month that is going straight into a savings account.
#5 Rebuild emergency fund. 6 months to 1 years worth of expenses in a relatively liquid account is what's recommended. Though it's tempting to pay back all your student loans first, your interest rates on your loans would be relatively low compared to the kind of debt you would have to take on if you lost your job and had no savings.
#6 Get your 401k Employer Match. It's free money! Contribute at least enough to get the match, but in reality shoot to contribute even more.
#7 Participate in your ESPP (employee stock purchase plan) Read this article from Wealthfront that explains why this is a no brainer.
#8 Set goals. Having goals makes your day to day financial decisions more meaninful. If you know that you will have X number of dollars saved a year from now if you follow your plan, then blowing your budget one month will have real consequences in your mind.
#9 Pay down student debt. Once you have your emergency fund set and you are getting the max amount of 401k match from your company, the rest of the money should go to paying down your debt as quickly as possible. Prioritize the higher interest loans first.
#10 Establish college funds. If you have kids, there are 529 college savings accounts that can help you prepare for that big future expense. After business school is a good time to start. Check out savingforcollege.com
#11 Set up a FSA/HSA account. You'll have to do some research to see if this is a good fit for you, but it could have some great tax implications.
#12 Talk to a professional. It might be the right time to talk to an accountant, lawyer and maybe even a financial planner.
#13 Get the right insurance. Make sure that you're totally covered and not a risk for a major financial disaster, whether this be with car insurance, life insurance or home owners insurance.
Got a few ideas you'd like to share? Please post them in the comments.