So, About That First Paycheck...

by Joe Mecca

VP, Communication / Company Spokesperson


I was recently approached to offer up some advice for someone just starting out in their career. They asked what I'd tell someone to help set them on the right financial path from the start. In part, I shared what I know from working at a credit union, but the a lot was straight from personal experience.  

Here are my top tips for someone just entering the working world:

  • Embrace the opportunity to take a fresh look at life. When you make the transition from student to worker, you’ll experience a few drastic changes, particularly in where and how you earn money, and where it goes. If you’ve made some mistakes up to this point, now is your chance to fix them. It’s also a great time to develop good financial habits that will make you successful over the long haul.
  • Have a spending plan. Create a budget to help guide you. Figure out how much you need for your monthly bills and regular, recurring expenses. Set aside some to save for longer-term goals and an emergency fund (trust me, this is important!).  Leave some for discretionary spending. Make sure the total you’re budgeting isn’t more than you’ll make that month. 
  • Track your expenses. Knowing where your money went is as important as planning where it’s supposed to go. Use online banking, a financial management site, or even a spreadsheet to track all of your spending and make sure you stay within your plan (back when I was starting out, I carried a pocket notebook). If you have to, make adjustments to your budget based on what you learn along the way. Need more for utilities? Cut back somewhere else. Have a surplus in grocery money? That might be more to add to savings! 
  • I like to keep my money separated. On pay day, I have some money that transfers to a separate checking account to pay my bills from, and some that I put in a money market account for my savings. What’s left stays in my checking account as my discretionary spending. This makes it easier to track, ensures that my savings and bills are taken care of, and helps prevent overspending.   
  • PAY YOURSELF FIRST.  Remember that budget, and how you set aside money for savings each paycheck? On pay day, set that money aside before spending a dime of the rest. That way, even if you spent the full remainder, you fed your savings. One of the biggest hurdles may people face is getting to the end of their budget period and ‘not having anything left for savings.’  If you make a habit of saving before you spend, you’ll thank yourself later. 
  • Related to the points the above, automate as much as you can. Your credit union should have tools to let you schedule bill payments and transfers to savings. 
  • Take advantage of your employer’s 401(k) or related plan. If your employer offers a match, at the very least contribute as much as you can get matched. It’s like doubling the return on your investment. I tell people to aim higher, and work to increase the amount they contribute over time (for example, increasing the percentage you contribute each time you get a raise) until you maximize your annual contribution.  
  • Don’t forget a Health Savings Account (HSA) as a way to stretch your paycheck. It’s pre-tax money, so whatever you set aside in your account will lower your tax withholdings, and you’ll have that money available for qualified medical expenses.  

  • Resist lifestyle creep.  I worked retail close to full time while I was in college, and then full time plus overtime after graduation while I was looking for a ‘real’ job. I had no time to spend the money I was making. After I landed my first job out of college, I suddenly had more time to spend money than I had money to spend, even though I was earning more of it. Even with a great new salary, it’s easy to let your spending habits get out of control. Set a budget for things like new clothes, dining out and entertainment, and hold off on buying a new car or getting a bigger apartment right away. 
  • Keep asking for advice and learning. Find the people around you who have their financial life in order and ask them what works well for them. Just as important…ask them what mistakes they’ve made along the way. If you aren’t sure who to ask, your local credit union is a great place to start. 


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