Sharing is caring!

What To Do When You Begin To Earn Big Paychecks From Your First Job

Congratulations on your new job and the big paychecks! It’s an exciting milestone in your career. You are likely a college student or have recently graduated with your undergraduate degree and while college may have helped you secure this first job, they probably didn’t teach you much about how to manage that big paycheck you are earning. 

If you aren’t careful, this large amount of money hitting your bank account each month can be rather overwhelming and you may be tempted to go and spend it all on a new car, wardrobe, or some expensive dinners with your girlfriends. Don’t get me wrong, I absolutely agree that some celebrating needs to be done! But, if you aren’t careful, you could potentially join the statistic of over 50% of Americans who are living paycheck to paycheck. 

So what do you do when you begin to earn big paychecks from your first job? After you have picked out your exciting (yet modest) way to celebrate your first “big kid job” here are some steps you can take to make the most of your increased income:

1. Budget and track your expenses:

Start by creating a detailed budget to understand your income and expenses. The Bible gives us many reasons to keep track of our money and to keep a budget, so if you don’t already have one today is a great day to get started! Begin by allocating your money to cover essential expenses, such as rent, utilities, groceries, transportation, and debt payments. Don’t forget to set aside a portion for savings and investments as well. Check out this article on how to create a value-based budget; which essentially is a budget that helps you focus on the things that matter most to you! 

If you are trying to live out your faith within your finances don’t forget to plan for generosity within your budget! There is no right or wrong answer when it comes to how much you should give, but here are some fundamentals of Biblical generosity to help you determine how much to plan for in your budget. 

• Watch this video series to help you set up your budget
• Grab my super simple budget spreadsheets to help you get started

2. Build an emergency fund:

Establishing an emergency fund is crucial. It acts as a safety net when things don’t go as planned. Yes, you just got a wonderful new job, but what happens if another big recession hits and your company has to pick a few employees to lay off? An emergency fund can help give you some peace and flexibility when disasters hit. That way you won’t have to take out a loan or run up your credit card debt in order to stay afloat.

Aim to save at least three to six months’ worth of living expenses. This fund will provide a safety net in case of unexpected events like medical emergencies, job loss, or major repairs. That way you aren’t taking money away from your retirement or long-term savings funds. 

3. Pay off high-interest debt:

Debt can be a goal crusher if it is not taken care of!. If you have any outstanding debts with high-interest rates, prioritize paying them off. There are a couple different debt payoff strategies, but in any case I recommend starting with paying off your credit cards or loans that carry the highest interest rates, as they can accumulate quickly. Becoming debt-free will alleviate financial stress and allow you to focus on other financial goals.

If you don’t have any high interest debts such as credit cards or personal loans, work on creating a plan to pay off any other debt. You may have student loans after graduating college, and even if the interest rates on them aren’t extremely high it is important to still set the goal to pay those off and become debt free with your new income from your first job! 

• Check out some lessons from the Parable of the Unforgiving Debtor
• Learn how I paid off my student loans early. 

4. Save for retirement:

“I’m young and retirement is far away! Why should I put money aside now???” If this is what you are thinking then stop! It’s never too early to start saving for retirement. In fact, the earlier you get started the better off you will likely be when you are ready to retire! Don’t believe me? Mess around with this retirement calculator and you will be amazed!

If your employer offers a retirement plan like a 401(k) or similar option, consider contributing a percentage of your income to take advantage of any matching contributions. If not, explore other retirement savings options such as an Individual Retirement Account (IRA). 

I typically recommend always contributing to your employer-sponsored 401(k) if your employer offers any kind of match even while paying off debt. If you don’t take advantage of the employer contributions it is like leaving money on the table. Begin your investing journey there while you work to pay off debt. Then answer these questions to see if you are ready to invest further. 

5. Invest wisely:

Once you have paid off your debt and taken advantage of your employer match, consider investing a portion of your income to grow your wealth over the long term. Most professionals recommend investing roughly 10% of your income. Educate yourself about different investment options, such as stocks, bonds, mutual funds, or real estate, and consider consulting with a financial advisor to help you make informed decisions.

Here are some articles to help you out: 

• How Christians Should Invest Their Money
• Options For Investing Your Money And Also Helping A Good Cause
• IRA Loans for Real Estate: A Hidden Investment Option

6. Set short and long-term financial goals:

Define your financial goals, both short-term and long-term. Short-term goals may include saving for a vacation, a down payment on a house, or buying a car. Long-term goals could involve saving for a child’s education, starting a business, or achieving financial independence. Having clear goals will help guide your financial decisions.

Included in your financial goals should be some generosity goals. Consider how you can track and increase your giving over time. 

7. Track your net worth:

Your net worth is an indicator of how well you are doing with your finances. If your net worth is positive and increasing each quarter then that is a sign that your finances are healthy. However, if your net worth is negative and it continues to decrease this is a sign that you need more help with your personal financial situation. Learn how to track your net worth here. 

8. Enjoy your success responsibly:

While it’s essential to be responsible with your newfound income, it’s also important to reward yourself. Treat yourself occasionally to celebrate your achievements, but be mindful of maintaining a healthy balance between spending and saving.

Remember, financial success is a journey that requires discipline, patience, and wise decision-making. By following these steps and being mindful of your financial choices, you’ll be well on your way to building a solid financial foundation for your future.

How Can I Help You? 

Let's Get Social!