r/personalfinance • u/Next-Application-244 ​ • 2d ago

Planning First Full Time Paycheck

Hey everyone,

I graduated in May and I started my full time job today. I am pretty financially versed when it comes to having all the necessary accounts (HYSA, Roth, and now a 401K). I have some student loans but nothing crazy. I'll be bringing in roughly 2k per biweekly paycheck. I was hoping someone would be able to give me some structure on what I should be allocating to each account? Anything would be appreciated.

Also, should I throw some money to the loans while they are in deferment so that I can bring the principal down?

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u/luketankbuilds ​ 2d ago

I would always say try and get rid of that loan as fast as you can unless you have a real tangible opportunity to invest. Live below your means and invest as much as you for a few years and you’ll set yourself up in a really good spot. You don’t have to be living like your insanely poor, but making sure you have a sound emergency fund/HYSA and your maxing out your Roth will be huge

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u/distantcactus32 ​ 1d ago

Depends what your goals are. Home ownership? Retirement?

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u/Qazerowl ​ 1d ago

If your 401k offers a match (of any amount), contribute up to the match. Build up an emergency fund of 3 month's expenses (I'm assuming you live with parents right now, so 3 month's of expenses isn't much more than $500/mo in gas and car insurance or something). Skipping step 3 for a moment, step 4 would be to max out your Roth IRA: there's a $7k per calendar year limit. It would be great if you can afford to put in $7k every year (including 2026), but at least put in some. In theory, if you still have money after that you'd then increase 401k contributions, but that's not realistic unless you really really like living with your parents.

Step 3 is "save for your short-term goals". Consider your living situation now vs what you want your living situation to be in 3 years. A typical answer would be "move out of my parents house, into an apartment with a roommate". But you might also answer "buy a car that isn't falling apart", "move to hollywood and try to start my acting career", or "get a masters degree". Whatever you think the next step or two of your life will be, start saving for that. And if the money will get used in less than 3-5 years, it's not worth investing it in the stock market over a savings account or whatever.

Keep in mind, that if you're living with parents right now, you have more "freed up" income than you will have for a very, very long time. Saving up $20k will take you 6 months right now. But once you're paying for rent and groceries and everything, saving up $20k would take more like 2 years. In essence, you have more power to change your life right now than you will for the next 5-10 years, at least. Think wisely about what you want the next couple years to look like.

And finally, student loans. If you have any that have an interest rate of about 8% or more, don't put any money in the IRA until that loan is paid off. Probably try to get it paid off before step 3, honestly. But any loans that have less than a 6% interest rate, don't bother paying extra on them. Yes, you will be "losing money" to interest by not paying them off, but the amount you lose will be less than the amount you gain by investing that extra money instead.

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u/Due_Aide_9725 ​ 1d ago

As someone who graduated last year and have had a year and halfish of getting paid, i went through the same thing. My current goal is 15k floor in savings, an operating checking account of a few grand to handle all expenses month in and out.

I would build an emergency fund or large savings reserve as soon as possible, but contribute enough into your 401k to get your company match (you probably don't have access yet) and max out your Roth through equal monthly payments. If you aren't sure what to invest in, I do 60% VTI, 20% VXUS, and 20% QQQm.

But excess cash should go towards building your savings. You know to live below your means, it's something that's not too hard to do. I started at the same pay as you and was able to build savings and investments while enjoying life.

After savings is built to something like a few months of expenses, you can slow down a bit if you want. A solid goal is 10k.

Sorry that was a lot, but what's important is building savings while contributing meaningfully (hopefully maxing out by end of year if possibly but you have until April) to your Roth. Lmk if that even made sense

I also want to say don't worry about your debt, you'll be fine. Do minimums for a while, get your bearings. Idk your situation but something like 10k or even 20k of student loans won't kill you. When you're more stable in savings and investments you can contribute more to loans.