Good Money Habits Should Start With Your First Job

Developing Good Money Habits: Start with Savings

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Credit Sesame on starting good money habits during self-improvement month September 2022.

So you’ve just landed your first job? Congratulations! That is an achievement in itself. However, don’t stop there. Self-improvement September is the perfect opportunity to commit to starting good money habits that set you up for a lifetime.

Starting good money habits at a first job is difficult. Young workers often don’t make much money and live paycheck-to-paycheck. As soon as money arrives in a bank account, it goes out to pay for necessities. Anything left over goes for entertainment.

Establishing good habits when you’re young pays off when you’re older. Developing good money habits that does not have to impact your young and free  lifestyle. At least, not too much. But putting money aside now and learning how not to waste money is beneficial in the long run.

Salaries of young workers

Here are the median earnings of 25- to 34-year-old full-time workers by education level:

  • Less than high school: $29,800
  • High school: $36,600
  • Some college, no degree: $39,900
  • Associate degree: $44,100
  • Bachelor’s degree: $59,600
  • Master’s degree or higher: $69,700

It’s clear that education impacts earnings. A college degree makes funding good money habits easier. The median earnings of those with a bachelor’s degree were 63% higher than those of high school graduates, according to 2020 figures from the National Center for Education Statistics. Education is a great self-improvement tool. Perhaps you could think about going back to school?

In the meantime, to make the most of your first job, here are some good money habits to help keep you out of debt, manage your money, be prepared for emergencies and even retirement.

Direct deposit Your Wages

Many banks waive monthly maintenance fees with direct deposit, saving you $5 to $30 a month in fees. Direct deposit can sometimes give you access to your money a few days earlier than if you got a paper check from your employer. Paper checks can take a day or so to clear at banks, and some banks process direct deposits a day or two early.

“Pay yourself” first with savings

A savings account is a smart way to pay yourself first and make sure your financial stability is funded before paying bills and budgeting for other activities. Save a set amount or a percentage of your paycheck through direct deposit to a savings account. A good starting point is 5%, though 10% is a good goal to help you save for emergencies, medical emergencies, vacations, big expenses, a down payment on a car or home, and other goals.

If you don’t want to do direct deposit, then you can schedule a recurring bank transfer from your checking account to your savings account on the same day each month.

Emergency fund

A savings account can be used for many types of expenses, but you may be better off having a separate account for emergencies. Things break, and having enough cash on hand to pay for them immediately helps you avoid credit card debt or taking out loans to pay for them.

If your emergency fund is big enough, you can keep 25% or so of it liquid so you can withdraw money immediately without penalties. You can then set up CDs or other accounts that pay better than a savings account to save for different intervals. A six-month CD usually pays more than a three-month one, so put 25% of the fund in three CDs that mature at different dates.


Learning how to create a budget keeps you on top of where your money is going. Create a budget on paper, using a spreadsheet on your computer can work, or on a phone app or website. A budgeting calendar can be a way to remind you when bills are due, and help you avoid late fees that can cause your credit score to drop.

Needs versus Wants

Budgeting helps differentiate between needs and wants. To put it another way, necessities and discretionary expenses.

Essential expenses include housing, utilities, health care, and a car payment so you can get to work. Even some of those can turn into optional expenses if you think creatively by taking public transportation to work.When times get tight you can cut some of the discretionary expenses from your budget.

Avoid debt

Buying a used car instead of a new one, shopping for the best deals, and considering all potential credit card purchases for at least 24 hours before buying are some ways to avoid going into debt. 

Credit card debt can be especially punishing to a budget, costing up to 25% or so in interest. Although, used responsibly a credit card can be a good thing to have when you get your first job. Using it wisely can help you build a high credit score and get good rates on loans when you need them. 

Student loans may be unavoidable, so try to pay them off as soon as you can. The lower your debt, the easier your finances are to manage now and in future.


You probably know that starting to save for retirement in your 20s gives your money more time to grow, and results in a bigger retirement fund than if you wait until your 30s. 

Contributing to a retirement account at age 25 for 10 years results in more money at retirement than saving at age 30 for 30 years, according to Fidelity.

  • Saving $6,000 per year from age 25 to 35 and not contributing to it after that puts the retirement account balance at $675,219 at age 65.
  • Saving the same $6,000 per year starting at age 35, and continuing contributions for 30 years puts the account at $606,438 at age 65.

Think about putting 10% of each paycheck in a retirement account when you start your first job. If your employer offers a payment matching plan, join it.

Make good money habits a lifetime goal

Smart money habits can keep you out of debt and help make future purchases, not to mention your current budget, easier to manage. Starting them when you take on your first full-time job can help ensure they are lifelong habits.

Consumers seeking to start good money habits may also be interested in:

Aaron Crowe
Aaron Crowe is a freelance journalist who specializes in personal finance topics. He has written for Wise Bread, AOL, AARP, Bankrate and other websites that focus on financial literacy and saving money. He has also worked as a newspaper reporter and editor. You can follow him on Twitter @AaronCrowe.

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