Your First Job: How to Set Up Your Financial Life Correctly

Getting your first paycheck in your early 20s is a big achievement. You are young and want to live life to the fullest. Going out with friends all night to party, ordering a taxi home, or ordering food when you are too lazy to make something doesn’t seem like a big thing. 

As someone approaching their mid-20s, I regret not thinking about budgeting sooner. Planning your life, even a little bit, is so important and will make your life easier in the future. 

Your Net Income

I'm sure you know the difference between gross income and net income. But in case you have forgotten, then let me remind you. Gross income is the money you earn before taxes. Net income is the money that you are left with after all the deductions. Net income is the one you need to use to plan out your monthly expenses. 

Set Up Your Budget 

This, in my opinion, is the best part because you can plan out all the fun ways you will spend your hard-earned money. But it is also the most difficult, at least sticking to it is. 

What you will need to do is take your net income and split it into categories like rent, food (groceries, eating out, or ordering in), debt if you have any, and other possible expenses that you have throughout the month. 

If you are someone on the creative side, then a great way to do that is to find a template online that you can use and you can customise it as you wish. But also, a simple notebook will work just fine. 

Remember not to be too strict with yourself. The point here is to make it a habit and not something that will make your life miserable. Add an entertainment section to your budget as well. If you like online gaming, when you set aside money for fun, choose options that are regulated and safe, such as trusted EU casinos with strong player protections and clear rules.

Set money aside 

Now this is very important. Put some money aside each month. One way you can do it is split savings into two categories - savings fund and emergency fund. By the titles, you can tell that a savings fund is meant for you when you are old. And that emergency fund is for emergencies like doctor's appointments, because we all know how expensive those can be. And please do not dip into these funds unless you have absolutely zero money left. 

Mistakes to avoid

Mistakes happen; it’s only normal. If they happen, they happen. Just move on and keep swimming. Here are some common mistakes I made and how you can avoid them: 

1. Not having a plan: without clear goals for your money, it's easy to overspend. Your budget is your plan.

2. Forgetting to track subscriptions: small monthly subscriptions like Netflix and Spotify can quietly add up over time. Go over them regularly and cancel anything you no longer use. Or as I do it, just subscribe when a new season of a TV show I want to watch comes out. 

3. Not setting boundaries with friends and family: it’s easy to overspend on social activities or feel pressured into financial commitments. Learn to say no and stick to your budget.

Building strong financial habits with your first job is one of the smartest things you can do for your future self. By understanding your income, creating a simple plan, and automating your savings, you are establishing powerful habits that will serve you for decades to come.