Your First Job

Your First Job — Financial Habits to Adopt for your Entire Working Life


Your First Job — Financial Habits to Adopt for your Entire Working Life

So you’ve landed your first job! After years of studying, now you’ll be working and getting paid. As those paychecks start, you‘ll want to establish some financial habits that can help make the most of your new income—starting now and continuing through retirement.

Establish good financial habits now and you'll give yourself many more options later.

Set up a budget

It’s tempting to just pay the rent and utilities, buy some food and then go have fun. But you’ll have more control over your money and be less prone to racking up debt if you build a household budget and then stick with it.

Living within a budget means prioritizing your expenses—from “I have to pay it” down to “I could do without it”— so you can make saving an automatic habit, like brushing your teeth. Tracking your income and expenses every month may also keep you from abusing credit cards and driving yourself down a financial dead end.

Contribute to your retirement plan at work

If your employer offers a retirement savings plan like a 401(k), sign up today and contribute as much as your budget allows. Don’t let the barely recognizable image of retirement make you think you can get to it later. A long time frame works to your advantage thanks to the power of compounding growth. Also, contributing to a workplace retirement plan gives you some great tax advantages. Contributions lower your taxable income, and that can cut your current tax bill. The tax savings could help you end up with more take-home pay, compared to saving the same amount in a taxable savings account.

If your company retirement plan offers matching contributions, save enough to get the maximum match. This “free money” can help build your savings even faster. If you don’t have a workplace plan, or want to save more than your plan’s limits, consider opening an Individual Retirement Account (IRA). A traditional IRA can give you an up-front tax deduction and a Roth IRA provides a source of tax-free income in retirement.

Get down to basics—investing basics

Retirement plans like 401(k)s and IRAs require you to make your own investment decisions. You need to pick investments that align with your goals and risk tolerance, keep an eye on their performance and regularly make adjustments to your portfolio, particularly as your goals and feelings about risk change. Give yourself a little extra schooling in the basics of investing so you can make better decisions. With decades of savings years ahead, time is on your side.

Plan for now and plan for the future

Your first job signifies the beginning of your working life. Establish good financial habits now and you’ll give yourself many more options later. We’re here to help any way we can.