Financial Considerations When You Get Your First Job
By Destiny White
Starting your first job can bring on a whirlwind of emotions and questions, especially when it comes to how you’ll spend your money. As a teen or young adult, there are many financial considerations to keep in mind when you get your first job.
You’ve done the hard part of landing a job, but this is only one part of the journey to gain and maintain financial success. In no particular order, here are five useful tips if you’re feeling like a deer in headlights when it comes to making, budgeting, and spending your own money in the real world.
Create a budget plan
This is the most important way to get a grip on your finances. The steps to setting up a budget include calculating your net monthly income, picking a budgeting method, and monitoring your progress. It is suggested to use the 50/30/20 rule to map out a basic framework for your budgeting – give yourself an allowance of 50% of your income for your basic needs, allow 30% of your income for things you want, and dedicate 20% of your income to savings and debt repayment. When saving your money, it is also recommended to automate your savings by opting for your bank to automatically send portions of your paycheck to a savings account on a periodic basis.
Get Ready for Retirement
This may seem far off, but this is a crucial step for your financial journey. Your 401(k) is your friend. What is a 401(k) and why is it so important? It is an employer-sponsored retirement plan to which an employer may match a portion of an employee’s financial contributions. Look into what policy your new job has in place for saving up for retirement and invest a portion of each paycheck towards your 401(k). This will help set you up for future success, keeping in mind that the traditional retirement age in the U.S. is 64. Additionally, be sure to look into any other benefits programs available to you as an employee to keep you healthy while not breaking the bank.
Debt, Be Gone
As I mentioned in the first tip, a portion of your budget should go towards paying off any debts owed, which for most young adults include student loans, credit card debt, and loans of any kind. 28% of debt for the average 18- to 24-year-old is from student loans. Paying off student debt, for many, feels like a clean slate. It is important to note that the COVID-19 pandemic has put a strain on many in their journey to paying off their student loans. You can find details of how the U.S. Department of Education is responding to the COVID-19 pandemic and student loans on the Federal Student Aid website.
Commit to Learning About Money
You can become a money expert, no matter your age. Every day you can work towards being better at managing your finances by reading personal finance blogs and books, listening to personal financial podcasts, and even speaking with financial advisors. Remember to choose reliable sources during this journey, and especially look for sources who have financial credentials. Find out what it means to be financially literate.
Establish Credit
Credit has the potential to unlock financial opportunities for the future. With that said, it is crucial to start building credit if you have not already. Here are some ways to establish credit for the first time. Setting up automatic payments and getting a low-limit credit card are great ways to start.
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In this week’s #CreditChat, we will answer all of your questions about financial considerations when you get your first job. Your financial journey does not have to be daunting, and we’re here to help you each step of the way. Tune into our live #CreditChat hashtag discussion on Twitter at 3 p.m. ET.
Our weekly #CreditChat started in 2012 to help our community learn about credit and important personal finance topics (e.g. saving money, paying down debt, improving credit scores). Each chat is hosted by @Experian on Twitter and all are welcome to participate. DM us any questions.
This week, we’ll discuss money advice to consider when you are in the job hunt.
Topic: Financial Considerations When You Get Your First Job
When: Wednesday, August 4, 2021 at 3 p.m. ET.
Where: Join the live hashtag discussion.
The panel will include: Leslie H. Tayne, Esq: Founder and Managing Director of Tayne Law Group, P.C. (f/k/a The Law Offices of Leslie H. Tayne, P.C.); Beverly Harzog: Credit Card Expert and Consumer Finance Analyst for U.S. News; Lawrence D. Sprung: CFP® President of Mitlin Financial, Inc.; Rod Griffin: Senior Director, Consumer Education and Advocacy, Experian and Christina Roman: Consumer Education and Advocacy Manager at Experian.
Gift Card Giveaway
Enter here for a chance to win a $50 Amazon gift card! We will be announcing a winner at the end of the chat. Entry Period: Raffle open now and closes at the end of this chat at 4 p.m. ET. Complete rules here.
Questions We’ll Discuss:
- What was your first job?
- If you could give your younger self one piece of financial advice when entering the workforce what would it be?
- What financial tips do you have for teens and young adults in the workforce?
- What are some things to consider when starting your first full time job?
- How can you create a budget to help you get the most out of your new income?
- What are some common financial mistakes people make when they first begin working?
- How soon after getting your first job should you start contributing to your 401(k) or other retirement plan?
- What should you know when deciding which employment benefits to sign up for?
- How can you avoid the temptation to spend more than you make?
- How can having your own income help you begin building your credit history?
- Any final tips for those entering the workforce?
Check out our complete list of upcoming personal finance Twitter chats here.