Financial help for your first job after school

Your income explained
Job adverts may quote an impressive annual income. Before jumping for joy, do you know what this really means each week or month? It's essential to be aware that your 'gross' salary refers to the sum before deductions like National Insurance, Income Tax and any work scheme contributions (such as pensions). Your 'net' income is the amount you're left with afterwards. Unless you can work overtime or earn a bonus, this is what you'll have to live off until the next payday.

Also find out where you stand with holiday and sick pay. This can vary from job to job, and may not kick in until you've completed a probationary period. Your employer may also make contributions to your pension, and offer other benefits such as gym membership or life insurance. Don't be shy to ask if your employer offers these benefits and how they affect you. It'll show you’re switched on about your working life.

Finally, be aware that in the UK the Minimum Wage Act protects you from being underpaid. This means your employer has to pay you a minimum hourly rate. The rate increases as you get older, but the law applies from the age of 16.

Understanding your outgoings
Once you know your net income and any extras you may receive throughout the year, the next step is to work out how much will be going out.

Work-related outgoings:

• Work out your monthly travel costs, including all your work journeys. Some companies offer schemes that pay your annual travel expenses up front. You then pay the company back in monthly instalments, making the overall cost cheaper to you. This is worth considering if you pay a lot of money on public transport each month.
• Set yourself a daily lunch allowance and calculate your monthly food spending.
• Do you need to invest in new work clothes? This may be a one-off cost, or you could put aside a small amount each month so you can go shopping for work clothes every now and again.
• If you're contributing to a pension or life insurance scheme at work, check whether the contributions are deducted before you're paid - if not, you may need to budget for them.

General outgoings:

• A lot depends on your circumstances. If you're living at home, for example, consider how much you should contribute to the housekeeping. If you're living independently, your rent has to be a priority payment.
• Make a list of all your utility bills like heating, electricity, phone and internet.
• Don't forget about bigger, less frequent bills such as car tax and MOT.
• You can't afford to go without food, of course, so factor in a healthy, balanced diet.
• Do you have any regular loan repayments to consider?
• Don't forget any hobbies and interests that cost money.
• Work out how much you spend on a typical night out and budget for a few nights out each month - any extra will have to come out of what's left.

Now you've drawn up your basic monthly budget, so you can be confident that what's left is yours to save or spend as you please. It's worth adding 10% to your expected outgoings - this way, you'll be more prepared if you’re faced with surprise extra costs. If you don’t spend it, you’ll have saved a bit extra without even trying!

Your financial future
Your first job will bring many changes in your life. The money you earn will undoubtedly give you more independence, as long as you're switched on from the start. Once things settle down, at work and in your wallet, you can consider saving and investing. Your first job may boost your spending power, but knowing that you have some set aside will also give you peace of mind. Why not set yourself a savings goal, such as a holiday in six months' time? It’ll give you something to look forward to and an incentive to save for - and before long saving will become second nature.