Money Moves: What to Do When You Land Your First Job

Just landed your first job? Congratulations! This is a big milestone on your financial health journey. Plus, getting your first paycheck always makes everything seem a little brighter.

Getting your first job can also come with additional responsibilities and expenses. It’s important to get a handle on managing your money from the get go. Why? Because this will help you stay on track and create lasting financial habits that work for you.

Not sure where to start with your paychecks? We’ve got you covered. Here are some money moves to take when you land your first job.

Create a Budget

When you receive your first paycheck, it can be tempting to reward yourself for the hard work you’ve put in. While a little bit of celebrating here and there is worthwhile, be sure that it doesn’t eat up a majority of your income. How do you do this? By creating a budget. A budget can help you work toward your financial goals and keep up with necessary expenses, while still having a little leftover to treat yourself.

Creating your budget doesn’t have to be complicated. You can build a reliable budget by:

• Reviewing your expenses for the last three to six months, and making a list of the bills you pay regularly. On this list include the amount you pay, the due date, and who you pay. Don’t forget to add in any new bills that may come up as a result of the new job. 
• Looking at your expenses that fluctuate each month and finding the average between them.
• Finding any expenses you may not pay monthly (subscriptions, insurance premiums, annual dues, or membership fees) and including them in your budget.

As you build your budget, don’t forget to build in a little bit of money for fun. This can help you stay motivated and on track. Once you have your expenses outlined, compare them to your new income. If your expenses are less than your income, you can find an amount you feel comfortable setting aside for saving and investing. If your expenses are more than your income, look to see what spending you can eliminate or reduce to get your budget balanced.

Review Your Accounts

Another financial move to make when you land your first job is to review your accounts. When you do this, you’re checking to see where your money is coming from and going to. It also allows you to make sure you have the accounts you need set up.

The two main accounts you’ll want to set up are a checking account and a savings account. A checking account will allow you to deposit your paycheck (or have it directly deposited by your employer). It will also allow you to pay your bills and cover expenses. A savings account allows you start saving for a rainy day or other financial goals you might have. When looking for a savings account, you can use one at the same bank as your checking account. You can also consider opening a high yield savings account (HYSA). These accounts have a higher interest rate for the money you keep in the account, so you’ll earn more and grow your savings faster.

Another account to consider opening is a credit card. Before you apply for a credit card, be sure that you understand the terms and conditions for opening it. If possible, try to find one without annual fees, too. Once you have your credit card, work to establish good credit behavior by paying your bill on time and in full every month.

Two other accounts to consider are an investment account and a retirement account. Check with your employer to learn more about if you’re eligible and how you would go about opening either of these. Both an investment and retirement account can help you grow your wealth over time and prepare for the future.

Build Up Your Emergency Fund

Since you’ve just started a new job and you’re already evaluating your finances, now’s a good time to start your emergency savings. Whether you need to cover a car repair, emergency medical bill, or move apartments in a hurry, it’s good to have money set aside that you can rely on for these unexpected circumstances.

Building your emergency fund will do two things for you. First, it will help you feel more prepared when life happens. And second, it will help you build a strong (and lifelong) savings habit. 

Not sure where to start on your savings journey? It’s good to start small so you can reach your goal in a short amount of time and feel accomplished. The ideal amount to save will vary from person to person, but a good place to start is $500. Once you’ve reached this goal, try working your way up to a higher number, like $1,000. One you’ve hit the next milestone, try aiming for one month of your take-home pay. This will ensure you can meet your monthly financial obligations if something were to change with your job. If you’d like more security, once you’ve saved one month of your take-home pay, you can aim for three to six months of your income. No matter what goal you set, you want to make sure you have enough money set aside to cover an unexpected emergency, without feeling like it disrupts your normal budget.

When you start saving your emergency fund, it’s okay to start small. Review your budget and see what you can comfortably save without impacting your other expenses. Then commit to saving this amount each month. To increase the amount that you save, you can also consider putting your emergency fund into a high yield savings account so it can earn even more interest on it.

Understand Your Benefits

Does your new job come with additional benefits like health and life insurance? If so, it’s important to understand how you can set them up to support your financial health goals. When you start your job, look into your company-sponsored benefits and learn how you can rely on them during emergencies. These can help you cover costs and avoid accruing debt when unplanned expenses arise. Not sure what your benefits cover? Your manager or Human Resources (HR) team can provide more information and resources to help you learn more. 

Additionally, your employer might provide a retirement program. If this is the case, it’s essential to understand your company’s retirement plan and start contributing to it early. When you contribute to a company retirement plan, the money comes out of your paycheck before you get paid. This is helpful because you don’t have to worry about moving the money — it’s done for you. Be sure to check if your employer offers a matching contribution. This means that as long as you put in the required amount to your retirement account, your employer will contribute the same amount of money. This helps your retirement grow faster, with no additional contributions from you. If your employer offers a match, put in enough to ensure that you get it every year.

Other benefits to ask your employer about are:

• Gym memberships
• Access to financial help
• Transportation assistance

It’s key to connect with someone in your workplace HR department to take advantage of all the benefits available to you.

Set Goals for Your Money

A budget is great for keeping you on track. But once you land your first job and you’re ready to take your finances to the next level, it’s time to set some long-term goals. Working toward your financial health goals can help keep you motivated with your budget and savings. To not only set, but also crush your goals, you’ll want to make SMART goals. This means that your goals are:

• Specific
• Measurable
• Achievable
• Relevant
• Time based

These five elements will help you have the best success when it comes to your financial goals. They give you a timeframe to work toward them and measurements to let you know when you’ve achieved them. One example of a financial goal could be “build up $1,000 in my emergency fund by saving $100 per paycheck. I will save the money automatically the day I get paid, and it will take me 10 months to reach my goal.” This goal has the 5 necessary components of a goal included.

Once you’ve created your financial goal or goals, be sure to track your progress. (As general practice, try to avoid setting too many goals at once. It can be hard to make progress on multiple goals at once, so setting one to two is always a good place to start.) Once you reach your goal, celebrate the win and then set another goal.

Landing your first job is exciting. It’s a major step on your financial health journey. But it’s also an important time to start thinking about your long-term goals. The habits you create now will likely stick with you for the rest of your life. So, be sure they’re habits that complement your financial health.

With a new job, budget, and plan for the future, you’re on your way to a bright financial future. And remember, SaverLife is here for you every step of the way. Share your successes and challenges with us by completing this brief survey.