This is the first post in a multi-part series on how to manage your finances so that you can build up your savings, have a safety net, and still live comfortably today without having to live paycheck to paycheck.

Part 1: Getting control and setting up your most important account

There’s one event in the month that every young working professional can remember without having to use an Outlook calendar.  That event is payday.  Regardless of whether you’re one of the lucky ones that gets paid twice a month, or you’re like me, and have to wait until the 31^st, there’s no doubt you know exactly when all of your hard work is going to pay off, literally.  Chances are, you’ve been looking forward to it for a few weeks, and as the balance in your checking account gets closer and closer to zero, you’re probably jumping at the opportunity to log on to your bank’s website and see all that money show up, just sitting there, waiting for you to spend it.

You’ll probably funnel some of it into a savings account, set some aside for common expenses like rent and utility bills, maybe put some away into your 401(k) or other long term investment account, and just use the rest of it on random purchases throughout the month.  As the end of the month gets closer, your account dwindles back down to zero and the cycle starts all over again.

For a while, this works out just fine.  But then, one day, something happens.  Your car breaks down.  You want to make a big purchase.  You need to pay back a friend who lent you money at the casino (hey, this has happened before).  What are you going to do then?  Your checking account doesn’t have enough money in it, and your next paycheck doesn’t come in for another week.  If you’re lucky, you may have a couple of options: 1) borrow money from your already debt-laden credit card, or 2) make an electronic transfer of funds out of a different account.  Neither of them are any good.

Don’t let this happen anymore.

Get control

It probably doesn’t surprise you to know that nearly half of all Americans live paycheck-to-paycheck.  It’s even worse for people under the age of 35.  One Metlife study several years ago showed that about 59% of all workers between 20 and 30 have no savings and need to rely on their monthly paycheck to make ends meet.  That’s a shame, because starting to save and invest in the early 20’s and 30’s is a great way to build up a huge cash balance for later in your life.  By starting early, you have time to ride the wave.  In addition to that, by having a little money for breathing room, you can avoid getting into situations where you don’t have enough in your accounts to take care of surprising and unexpected expenses – and believe me, they will come up.

So how do you get control and build up your nest-egg?

Traditional wisdom says to “pay yourself first.”  For those that haven’t heard this term before, it means that before you spend money on any bills, utilities, clothes, electronics, or other expenses, you should set aside a certain amount of your paycheck to go into a pre-planned savings, checking, or investment account.  This is a great way to start saving money, but as much as I believe in paying yourself first, I think there’s an even more important aspect that can help you get control, and that is to change your habits.

Granted, most young professionals have a load of student debt, and many of them have other unavoidable expenses, but I’ll bet you that a good amount have their share of extravagant (relatively speaking), lavish, or large expenditures.  Is your rent killing you?  Maybe you should find a more affordable place.  Do you have car payments that leave you with barely enough for gas money?  Downgrade.  Are you spending a ton on electronics?  Cut back – listen to the radio.

Regardless of what your specific situation is, you’ll need to figure out if you’re not living within your means, and do something about it.

Read ahead: Your most important account

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