Congrats Grad!
You landed a job. The offer said $65,000.
Quick math says that’s over $5K a month and you start picturing all the possibilities.
But then the paycheck hits. And it is NOT $5k per month.
Also, this “living” thing is expensive.
And HOW much do I need to be saving?
Not as simple as you thought…
But it’s not Impossible to do money right even as a new grad.
3 things I recommend you understand quickly.
1. Paychecks Are LESS Than Your Salary
This may be obvious, but your monthly salary isn’t what shows up in your bank account.
You’ve got:
- Federal income tax
- State tax (not in Texas though 🙂)
- Social Security & Medicare
- Health Insurance
- Dental Insurance (bc somehow that's different than health)
- Retirement contributions (hopefully)
Safe to assume you’re only seeing ~70% of the paycheck you thought you’d get. So ~$3,800 per month in the $65k example.
This is important as you’re making your first budget.
This is also important when you get your first bonus or raise.
A $5,000 bonus is not $5,000 of spending money… it’s closer to $3,500.
Understanding what actually hits your bank account will prevent over spending early on.
2. The Basics Have Power
Before you spend a dime, take 30 minutes and set up the basics (I call this Fast Start for a reason).
You’ll need:
- Checking + High-Yield Savings: Get one of each. Checking is for your day-to-day. High-yield savings is where your emergency fund is stored.
- Automate Automate Automate:
- 10% of your Paycheck to 401(k) through your employer
- Remaining 90% to your Checking Account
- Then, set up an auto-transfer the day after payday towards:
- Credit Card Debt
- Student Loans
- Building Emergency Fund
- Simple Budget: You don’t need a masterful spreadsheet. Start with the 50/30/20 rule:
- 50% needs
- 30% wants
- 20% savings/debt
- Emergency Fund of $1,000: Before you do other savings, your first financial “win” is the emergency fund. This won’t feel like much compared to the cost of a house/car/vacation, but it will be a backstop for anything unexpected.
Whether you're a saver or spender, automating the basics forces good habits.
3. Don’t Let Lifestyle Creep Win
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Source: The Finance Twins |
When those paychecks come, we like to spend.
Work is hard and we want to reward ourselves.
I'm actually less worried about one-time splurges.
What can really get people is the recurring spending you commit to.
$2,100 rent instead of $1,600? That’s $6,000/year gone.
Upgrading your car? A $600 monthly payment could grow to $100,000 after 10 years.
On the lower end, monthly subscriptions, gym, weekly Saturday brunch all add up fast.
In your first year, set some simple guardrails:
- Keep rent under 30% of your take-home pay
- Use your credit card like a debit card (pay it off in full)
- If you want something over $100, wait just 7 days. If you still want it, then buy it.
You’ll slowly start to find your balance between saving for long-term freedom and spending on short-term comfort.
Be realistic. You’ll need both.
But for most of us, it’s way easier to only think about short-term comfort 🙂
Whatever you do, know you can’t do it all
You don’t need to max out a Roth IRA, pay off your student loans, and build a $25K portfolio in your first year.
You just need to do the basics consistently.
- Automate savings so you don’t rely on willpower
- Spend less than you make
- Dedicate time to learning about money (Newsletters, podcasts, books, etc.). Knowledge is power.
Most people drift into their financial situation.
It’s way more fun to decide yours.
Need help getting set up?
Let’s walk through it together. You’ll leave with a clear plan and confidence that you’re on the right track.
