• Scott Snider

Life Stages Planning: Starting a Career

You made it! Whether you’re just finishing up high school, graduating from university, or transitioning out of an apprenticeship—taking the leap into a new career is an exciting step. It’s one of the biggest markers of adulthood. You’ve prepared your whole life for this moment. Congratulations, you’re now a contributing member of society.

However, starting a career isn’t just about climbing the ladder, collecting paychecks, and finally being able to upgrade from “dorm life.”

There are important financial planning tasks that should be addressed when starting your career. Unfortunately, these tasks are often overlooked, causing problems down the road.

But that won’t happen to you, will it? You’re going to get everything taken care of right off the bat, and your future self will thank you for it. By having a clear plan of attack from the get-go, you’ll be equipped to make decisions to accelerate your growth and avoid common pitfalls.

So, let’s get started. When creating your financial road map, here are some important things to consider.


To begin, let’s go over a few important rules that should make up the backbone of your plan.


When your paychecks start streaming in, it’ll be tempting to treat yourself to an immediate lifestyle upgrade. After all, you’ve worked hard to get here, you deserve it.

While that may be true, you’d be wise to start off your working life by building up an emergency fund. This fund should be three to six months’ worth of living expenses.

Obviously, building a “rainy day” fund isn’t as exciting as leasing a stylish new car. But when faced with an unexpected financial emergency, you’ll be happy you have it.


But how much of each paycheck should you be setting aside for your emergency fund? Do you need to continue living a “ramen noodle life” until it’s taken care of?

The answer is no. You can still enjoy your life. But you should shoot for saving 10% of your income each month (15% would be even better).

If that seems too difficult, just remember, starting small is better than not starting at all. Even if it’s just 5%, you can increase it by 1% increments over time as your budget permits. Set specific goals to save X% by a certain date. Continue doing this until you reach that 10-15% target savings goal.


This one is important. If you’re not careful, this could lead to financial disaster. We live in a culture built on credit and debt. You’ll likely have to pay for things with money you don’t have (if you haven’t already). This isn’t necessarily a bad thing. You just need to stay in control.

Here is what it looks like to be in control:

  • Consumer debt payments do not exceed 20% of net monthly income.

  • Monthly housing costs are less than 28% of gross monthly income.

  • Total monthly payments on all debts must stay below 36% of gross monthly income.

  • Student debt repayment should be under 15% of gross monthly income (in most cases).

By following these guidelines, you can be sure things never spiral out of control.


There’s no need to be ashamed if you still need your parents’ support when just entering the workforce. It’s a different world than it was a couple of decades ago. And the reality is, independent financial survival after college is harsher than ever.

If you feel like you’re unable to make ends meet, it’s okay to get temporary help. Just be sure to keep open lines of communication with your parents, set realistic expectations, and create a plan to gradually wean financial dependence over time.


This is Personal Finance 101 and easy to do, but many people never take the time to do it. First off, you need a separate checking and savings account. But this is only the first step.

If you really want to get organized and make sure you’re staying on track, consider opening multiple savings accounts. That way, you can designate each account to one savings goal (down payment on a house, buying a car, other large purchases).


If your dream is to buy your own home, there is a right way and a wrong way to do it.

First, you need to consider the timing. Are you in a healthy financial position for buying a house? To determine this, review the financial rules of thumb we discussed earlier.

Secondly, don’t do it alone. We live in a DIY society with access to unlimited amounts of information at our fingertips. But sometimes it’s best to consult with an expert (mortgage officer, banker, financial planner, etc.). Buying a house is one of the biggest decisions you’ll ever make. You want to make sure you’re doing it right and not overlooking anything important.


Here’s another one that, if started right when entering the workforce, can be enormously advantageous. It’s easy to procrastinate. After all, retirement is several decades away. But by being proactive now, the compound interest you’ll build up will put you light-years ahead of the procrastinators when you retire.

Keep in mind, opening a retirement account is just the first step. After that, you need to make regular contributions (this can be automated). If your employer offers a company match, be sure to take advantage of it. By contributing at least up to the company match, you’re basically receiving free money (while simultaneously reducing taxable income).


If you’re like most U.S. college graduates, you have a fair share of student debt. When it comes to paying it off efficiently, it’s important to remember that not all student debt is created equal. If you’re able to make extra payments, do so with your private student loans first. These generally carry higher interest rates.

It’s also important to review the terms of your promissory note. This is basically the “rule book” for your loans. By understanding the ins and outs of your loans, you’ll know how to pay them off in the quickest way (and avoid breaking the rules and suffering the consequences).

One easy way to reduce your loan is to investigate your options for refinancing the loan at a lower interest rate. Another way is to check your employee benefits to see if they offer student loan repayment assistance.

Just remember, nobody is going to do these things for you. There are ways to reduce your loans. You just have to take the initiative to go out and find them.


Finding the best plan of attack to pay off your federal student loans can also save you significant amounts of money. The first step is choosing the most appropriate repayment program for your situation.

For example, Income-Driven Repayment (IDR) plans are best for those with entry-level incomes or high debt ratios. You’ll pay more interest in the long run, but it is a good choice if you’re struggling to make your monthly payments.

On the other hand, if you have a higher income and can afford it, consider switching to a 10-year repayment plan. This requires higher payment amounts but will save you the most on interest.

Other ideas to consider are the Public Service Loan Forgiveness program if you are a public employee, and refinancing your loans if you’re not.

There are many different options available. It’s your job to decide which one is most beneficial to you.


One of the biggest mistakes people make when entering the workforce is diving in without a plan. This is a recipe for wasted time and setbacks. Without clearly defining your goals (and a step-by-step path to reach them), it’s easy to get distracted and pulled in different directions.

It’s true, there is a lot to consider. It can be overwhelming. But the good news is that you don’t have to do it alone. At Mellen Money Management, we have over a decade of experience helping people define their financial goals and creating easy-to-follow plans to achieve them. If you’d like to learn more about how we can help, set up your free introductory phone call online today!

If you have further questions:

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Helpful Resources:

Consider When Starting a New Job
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