Finances for your first job: what should you do with your first paycheck?

Starting work is exciting, but it also brings new responsibilities. Knowing how to manage your money will enable you to enjoy life today and build a secure future.

Key terms

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Budget

Planning your monthly income, expenditure and savings.

Hucha de cerdito rota con monedas

Essential expenses

Regular, necessary payments such as your rent or transport costs.

How should I split my money?

  • 50% for essential expenses

    Allocate 50% of your income to essential expenses. These might include rent, food or any basic services you use every day.

  • 30% for non-essential expenses

    Managing your money responsibly doesn’t mean giving up your hobbies or your favourite restaurant. You can set aside 30% of your income for leisure spending.

  • 20% for savings and investments

    Just 20% of your income is enough to start saving towards your goals or ensure financial peace of mind in the event of the unexpected by building up an emergency fund.

Three reasons to strike a balance in your finances

Saving early: the secret to financial success

  • Emergency fund

    Build up a fund equivalent to 3-6 months’ worth of your essential expenses. This will protect you if you lose your job or have unexpected outgoings.

  • Long-term goals

    Save to achieve your big goals such as travelling, paying for education or investing in a business.

  • The power of compound interest

    The sooner you start saving and investing, the more your money will grow thanks to time and compound interest.

  • Save from the very first minute

    Waiting until the end of the month to save whatever’s left over isn’t the best strategy. Transfer the money to your savings account on the first day to ensure you don’t overspend.