If you’ve finally gotten that job (or that raise), it can be easy to assume that you don’t have to worry about money anymore. You’ve got that steady paycheck, after all.
But every paycheck is steady until it isn’t - and the biggest mistake you can make with your income, especially once it hits the level at which you no longer need to stress about your day-to-day expenses, is to assume it’ll stay that way forever.
At Kiplinger, certified financial planner Joseph C. Conroy explains:
That’s the challenge with high-earning professionals. Being intelligent and making a lot of money does not mean you know what to do with it when you have it.
These careers also take more time to start bearing fruit. That extra time puts the professional behind on their savings goals, which creates an even greater need to be really good savers when they start making money.
In other words: even though you might be tempted to live it up once you’ve finally started earning “real money,” it’s better to start asking yourself how to use that income to generate long-term financial stability.
You should also ask yourself where your knowledge gaps are, in terms of personal finance. As Conroy puts it:
There is a false equivalence that since someone is an expert at one thing — medicine, law, engineering — they are also an expert in a totally unrelated thing, money.
Luckily, there are gobs of resources to help you understand everything from setting up a budget to getting started with investing. You can also pick a big-name financial guru to follow - Ramsey, Orman, Buffett, Bogle - and read their books or listen to their interviews. (The guru you choose doesn’t really matter, since they all offer the same basic advice.)
No matter what you’re earning right now, don’t let yourself assume you’ll continue to earn that much money for the rest of your working life. Careers go through periods of growth and periods of decline.
Industries appear and disappear. Your income stream may also change due to layoffs, health issues, caregiving responsibilities, and so on. So remember that your current wage or salary, no matter what it is, is temporary - and do your best to ensure that what you earn today will help set you up for financial stability tomorrow.
This article was originally published on 9 July 2019.