How to Set Up Your Finances in Your First 90 Days on the Job

Do one thing: Don’t be overwhelmed by the number of tasks you need to complete in the next three months or so. Instead, tackle one thing at a time until you have created a strong foundation for handling your hard-earned money. You’ve got this! 

Manage Your Money Wisely 

To everyone entering the workforce as a new graduate, congratulations!

Navigating the last few years was likely more than a little challenging and you have marked a milestone to be proud of. Hopefully, you’ll land a first job that fits your talents and abilities, but no matter what, take this opportunity to put some financial systems in place that will serve you well in the years ahead.

Avoid the Spending Trap

Caitlin Muldoon, CFP, co-founder and principal advisor of Rising Femme Wealth, says for many new or recent graduates, the job they get out of school is often their first full-time position and can be their highest-paying job to date. “This is a wonderful reality, but it can also be a spending trap,” she explains. “It’s easy to spend more when we make more, and despite how simple the advice ‘spend less than you make’ is, most Americans struggle with this in practice.”

How to Money

In my book “How to Money: Your Ultimate Visual Guide to the Basics of Finance,” Kathryn Tuggle and I break down the basics of money, including:

• How to earn money
• How to manage money
• How to use money offering the tools you’ll need to take charge of your finances and your future.

Here are some of the most important strategies to consider, along with guidance from other financial experts to stay on track financially in the months – and years – ahead.   

Understand Your Student Loan Debt 

Don’t sleep on this one.

You need to know exactly

• What kind of loan you have (federal or private)
• The interest rate
• Length of the loan

Once you have those details, which are easy to find through your lender’s online portal, you can work to create a repayment plan that best fits your budget.

Create a Budget

Don’t let the word budget scare you. Coming up with a spending plan is easier than you may think. Why? Because a budget is the best way to find out how much money you have coming in and going out every month. And there are tons of budgeting methods out there, including apps and online tools – so it should be pretty easy to find one that works best for you. Start by tracking your income and expenses, so you can make sure you aren’t spending more than you earn.

Set Some Goals

Here’s the thing: You have to know what you want to be able to get it. So once you have a good understanding of your budget in place:

• Take some time to think about what you would like to accomplish in the next five years and beyond.
• You can call these short-term and long-term financial goals and they could be anything from buying your first apartment to taking a dream vacation.
• The key here is that having goals will help you stay focused on what matters most to you.

Use Separate Accounts to Keep Savings on Track 

With your new financial goals in mind, you’ll have a better chance of reaching them if you keep your money in separate accounts, instead of having it all in one account. Trust us. Years of data show that if you see your money sitting in an account, you will spend it.

Setting Up Your Savings Plan

Here are the steps to set up a separate savings for different goals:

• Open an FDIC-insured high-yield savings account that pays some interest at a credit union or bank for each of your goals.
• Have a portion of each paycheck moved over automatically each month, so you don’t have to worry about it every pay period.
• Review the plan every 6 -12 months.

Build an Emergency Fund

Starting a new job is a great time to create – or build up – an emergency fund. This is where those additional checking or high-yield savings accounts come in. One account should be strictly for emergencies, where you’ll save for unexpected expenses, like an emergency room bill or car repair. Having this fund helps to ensure you won’t end up in debt when something unexpected happens because you had to charge it to a high-interest credit card. 

Check in on Your Credit

And speaking of credit, you will need to check in on your credit reports, which you can download for free from the three main bureaus – Experian, Equifax TransUnion at www.annualcreditreport.com/index. Then, go line by line through them to make sure all of the information is correct. You probably won’t have a long report just yet, but this is the time to make sure there are no errors. Check all three because not all lenders report everything to all three.   

Use Credit Cards With Caution

A new job and increased income could bring in more credit card offers. So it’s important to understand that having too much debt (more than 30% of your total available credit) can bring down your credit score, which can make it more challenging (and more expensive) to take out a loan for a house or a car down the road. Credit is so important to your financial future, so take some time to understand how to build a strong credit score, and make sure to pay your bills on time, every time.

Invest in Your Future

As soon as you are earning money, you should also be investing some of it. That means if your employer offers a 401(k), or other retirement account contribution:

• Start participating in your workplace savings plan.
• Contribute enough to secure the company match. (When you don’t, it’s like leaving free money on the table.)
• Also, consider opening an IRA (individual retirement account).
• The sooner you start saving, the more time your money has to grow.

There’s another bonus: Contributing to a 401(k) will also reduce your tax bill.

Add Some Protection 

While you may still be on your parents’ health insurance plan, when you turn 26 you will need to secure your own. One reason is because debt caused by a medical emergency can blow up your finances, so it’s essential to make sure you are always covered. If your employer doesn’t offer healthcare benefits, talk with your human resources department about other options. There are also plans on the healthcare marketplace you can review.  

Set up Successful Systems

In those first few months at a first job, Muldoon encourages new grads to focus less on developing perfect self-discipline and more on creating systems that make good financial decisions automatically. And while those early days of a new career can set the tone for many years of financial habits, your first job doesn’t determine your financial future. “Think of it as your first chance to establish systems around a regular paycheck, retirement savings, spending, and saving,” she says. “Being a high-earner is not what builds wealth; saving and investing, even if it’s a very little at a time, is what does.”

With reporting by Casandra Andrews