Saving versus spending: How to prioritise when you are beginning your career

Saving for retirement might sound like a bizarre concept at such a young age. But if you lay the groundwork now, it will make a big difference.

It is as easy as putting a priority on saving and making smart financial moves, like contributing to retirement savings or building an emergency fund.

Consider these tips to help you stay on track:

Prioritise your spending.

Set a budget.
This should include your monthly spending and your long-term savings goals. Rework your budget as your income changes, or when major life events occur.

Tackle high-priority expenses and high-interest debt first.
Pay for your needs, such as housing, groceries and insurance, before your wants. And attack short-term revolving debt, such as credit cards first.

Find balance.
Do not spend too much or save too much. We are not suggesting you start putting half your salary toward savings. Find a compromise to balance expenses and wants.

Establish saving habits.

Plan ahead.
Make setting money aside for saving a part of your overall budget.

Expect the unexpected.
Allocate a portion of your budget to building an emergency fund. Start by accumulating one month's worth of income, then increase it, as you are able, to cover three to six months of living expenses.

Divert spending into saving.
Once you have paid off debt, avoid taking on more. Instead, take whatever amount you were paying toward debt, and add to your savings.