You Got Your 1st Job! Now what? Budgeting for Early Career Professionals

By Imani Williams

Introduction

Congratulations on landing your first full-time job! This is a huge accomplishment and you are well on your way to financial abundance!

But it’s important that you set yourself up for success now! So here's a template spending plan based on the 50-30-20 rule to help you organize your finances. This guide will explain how to allocate your income, automate expenses, and adjust the plan to fit your unique goals.

Quick disclaimer: Everyone’s financial situation is different, so it’s important to adjust according to your unique circumstances. 

This plan is great for early career professionals who…

• … still live at home with their parents.
• … don’t have a car.
• … make around $50,000/yr with their new job.

If these don’t match your circumstances, that’s completely fine. Adjust the template to best suit your needs!

The 50-30-20 Rule: A Quick Overview

This method is simple yet effective:

• 50% for Needs: Essential expenses like rent, utilities, insurance, minimum debt payments, and other bills & subscriptions.
• 30% for Wants: Discretionary spending such as entertainment, dining out, and hobbies.
• 20% for ESI (Early Debt Repayment, Savings, and Investments): Building financial security through saving, investing, and paying off high-interest debt.

Assuming you have an annual salary of $50,000, this breaks your wages down to about $3,333 monthly after taxes (assuming 20% tax). Here's how your spending plan could look.

 

Template Spending Plan

1. Needs (50% = ~$1,667/month)

Since you live at home and don’t have a car, your essential expenses may be lower than the typical 50% allocation. This is a chance to redirect some of that money to other priorities like investing or saving.

Typical Needs:

• Insurance:
• Health Insurance: If not covered by a parent’s plan, budget ~$200/month.
• Renter’s Insurance: ~$15/month, even if you're living at home, to protect your belongings.
• Debt Payments:
• Minimum payment for student loans or credit card debt.
• Example: $150/month for a SUNY student loan.
• Subscriptions/Utilities:
• Phone, internet, or streaming services: ~$50–100/month.

Automate:

• Set up autopay for fixed expenses like insurance premiums or minimum debt payments.
• Use online bill pay for providers that don’t offer autopay.

 

2. Wants (30% = ~$1,000/month)

Wants are discretionary and provide a bit of breathing room for enjoying your new income. Living at home and saving on rent means you have more flexibility here.

Examples of Wants:

• Entertainment (streaming services, concerts, gaming): ~$200/month.
• Dining Out or Social Activities: ~$300/month.
• Shopping (clothes, gadgets, gifts): ~$200/month.
• Travel Fund: ~$300/month (save for quarterly vacations or weekend trips).

Adjustments:

If you don’t have a lot of wants right now, you can reallocate some of this money to your ESI category for bigger financial goals.

 

3. ESI (20% = ~$667/month)

This category is crucial for long-term financial health. 

Follow the 6-point plan for savings and investments:

1. Insurance: Make sure you’re covered with health and disability insurance.
• If offered, opt into employer-sponsored insurance plans.
2. Emergency Fund:
• Start small: Save for 1-2 months of essential expenses (~$3,000–$4,000).
• Aim to build this fund to cover 6 months over time.
• Use a high-yield savings account to grow your emergency fund.
3. 401(k):
• If your employer offers matching, contribute enough to get the full match (typically 3–6% of your salary).
• Example: If they match up to 3%, contribute $125/month to get the full match.
4. Debt Repayment Plan:
• Focus on eliminating high-interest debt (6%+ interest rate) first. For example:
• Pay extra on credit cards or private student loans while making minimum payments on federal student loans.
5. Larger Emergency Fund:
• Once you’ve hit short-term savings goals, save at least 6 months of living expenses (~$10,000–$15,000).
6. Big Financial Goals:
• Allocate money for future milestones like buying a car, moving out, or investing in a Roth IRA.

Automate:

• Set up automatic transfers to your emergency fund or investment accounts.
• Schedule contributions to a 401(k) or IRA directly from your paycheck.

 

 

Sample Monthly Breakdown

Category	Amount	Examples
Needs (50%)	$1,667	Insurance, subscriptions, debt payments.
Wants (30%)	$1,000	Dining out, shopping, travel fund, hobbies.
ESI (20%)	$667	Emergency fund, 401(k) contributions, extra debt payments.
Total	$3,333

 

Adjusting the Plan to Your Goals

1. Increase Savings

If you’re saving for a big goal like moving out or purchasing a car, reduce spending on Wants and redirect that money to your ESI category.

• Example Adjustment:
• Wants: $700/month.
• ESI: $967/month (extra $300 towards savings).

2. Invest for the Future

Start building wealth through investments:

• Use a Roth IRA or brokerage account for long-term investing.
• Apps like Acorns or Robinhood can simplify the process. 

We have a ton of resources at The Black Currency to help you Invest. Check them out below! 

• 10 Must-Read Tips Before Using an Investing App
• Top 5 Investment Apps for Beginners
• Empowering the Black Community Through Investing Apps!
• Financial Empowerment: Investing Resources for the Black Community
• How Millenials & Gen Z Invest in 2024
• Social Media & Investment Trends: How to Use It to Your Advantage
• Pros and Cons of Robo-Advisors: Is it really okay to let AI invest for you?

3. Accelerate Debt Repayment

If you have high-interest debt, prioritize paying it off faster:

• Reallocate part of your Wants budget to increase extra payments.
• Example: Add $200/month to debt payments, reducing Wants to $800/month.

4. Balance Between Fun and Responsibility

If you feel restricted, tweak the percentages to fit your lifestyle. For instance:

• Needs: 40%.
• Wants: 35%.
• ESI: 25%.

Living at home and earning $50,000 annually is an excellent opportunity to set yourself up for long-term financial success. By using this 50-30-20 spending plan as a guide, you can enjoy your new income, save for future goals, and build a secure financial foundation. Adjust the plan to fit your needs, automate your finances, and stay consistent to achieve your money goals.