Managing your money when you start your first job

Photo by  Gift Habeshaw  on  Unsplash

Photo by Gift Habeshaw on Unsplash

Starting your first job is the ideal moment in time to develop healthy money management habits. During your student times, you may have had to survive on a budget, with not much leeway to set aside money for retirement and investing. Hopefully however, this changes once you have signed your very first employment contact and negotiated your salary well.

When thinking back about my 26-year-old self – the time in my life when I had my first job (at a bank), I realized I had not yet developed healthy money management skills. To get inspired for this article, I started scanning through money blogs. For instance, what did my favorite site “The Balance” recommend. This is what author Miriam Caldwell suggests on “The Balance”:

1.         Save for retirement

2.         Budget

3.         Set goals and create a plan

4.         Avoid Debt

5.         Give back.


While I really like this plan, I would add the following items to the list:

6.         Get the “right” insurances

7.         Learn about the basics of investments

8.         Get a money mentor or money peer group.

Let’s look at the list in more detail:

1.         Save for retirement

We all agree that it is never too early to start. With public pension schemes not covering 100% of the retirement phase (anymore), the famous generational contract not quite working anymore in countries such as Germany (the idea of the young generation paying for the old generation’s retirement), and with women in industrialized nations such as Germany earning 21% less than their male counterparts, this is crucial. We at Finelles suggest: get started, even if you start with small amounts (and this could consist in investing EUR 50 per month into an ETF index fund). The earlier you start, the better you will be able to benefit from the compound interest mechanism. Our article on retirement saving provides more details.

2.         Budget

Being able to budget well is crucial. It helps you keep your expenses under control and to free up money for investing. When you have your first job and all of a sudden hopefully earn a decent amount of monthly income, you might be very tempted to spend it all. Even worse, you might be tempted to live above your means. Budgeting – ideally, by following the 50-30-20 rule – helps you develop and maintain healthy money management habits. The 20% stands for money you should set aside – and ideally invest.

3.         Set goals and create a plan

Taking stock of your life goals and translating them into financial goals is a beautiful concept. To me personally, this is about turning “etherical” ambitions into a tangible outcome. Once you have defined your life and financial goals, you create a plan on how to best reach them. Doing this exercise once have your first job is ideal in terms of timing: you have plenty of time to reach longer-term goals. I am thinking about saving for a down payment for an apartment. Let’s assume you need EUR 50.000 as a down payment – you could save for this for ten years starting at 25 years – and easily reach your goal at age 35!


4.         Avoid debt

This is a total no brainer. Do not take on any debt. If you have old debt (from a student loan, for instance), pay it down as soon as possible. Don’t get lured into paying expensive TVs, phones or going on a luxury cruise – paid for by a private consumer loan. There are better ways to spend your money than on interest rates (which you will accumulate if you get a loan – that or a lower credit score at SchuFa if you amass too many of these private consumer loans).

5.         Give back

Fine by me. This depends on the individual. I myself signed up for a program with an NGO when I turned 30. Since then, I pay EUR 30 per month so a girl in Bénin (a French-speaking African country) can go to school. This was a personal decision. Do I get a tax benefit? Yes. Was this my main motivation? No. I knew I wasn’t going to have children anytime (soon) and wanted to give back.

6.         AND NOW – get the “right” insurances

Germany might be more obsessed with over-insuring oneself against any type of risk. There is a reason why the term “Angst” is known internationally. If there was one insurance I would recommend you buy once you get your first job, it would be an occupational disability insurance. This helps you in case you cannot work anymore. Another important one is a personal liability insurance. Depending on where in the EU (or elsewhere) you live, you might want to do your research on which cover to get.

7.         Learn about the basics of investing

We at Finelles are on a mission. We want as many people as possible to get smart about investing. We want you to learn how to make money work for you. But investing is like a new language. You need to learn the basics and understand what kind of investor you are to do it well. Hence, we encourage our readers to get savvy early on. It doesn’t matter whether you take our online classes, get a book (Why not start with “Investing for Dummies”?), just tackle the topic and learn learn learn.

8.         Get a money mentor or money peer group

I recently attended a workshop on investing. It was for women only. The advice given however applies to everyone. Get a money peer group or a money mentor – anyone that helps you learn and maintain healthy money management habits. One of the reasons why Weight Watchers succeeds in helping its members lose weight is the accountability mechanism. When you team up with others in a similar position to yours, there is a stronger incentive to stick to what you learned and implement it. A money mentor – someone you trust and admire for her or his money management skills – could also be a suitable route.

You can do it! Start early. Baby steps, as they say.

Written by Caroline-Lucie Ulbrich
Finelles Founder. Coach and organizational consultant (ECB, Deutsche Bank and UBS). 



(4 min read)