Personal Finance

4 Important Tips for Graduates Beginning a First Real Full-Time Job

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Last updated on July 25, 2019 Comments: 5

The summer following graduation is an interesting time for recently-former students. The newly-commenced young men and women, those not opting to pursue an additional number of years in an institution of higher learning, spend their time amongst activities such as attending backyard barbecues in celebration of their achievements, traveling to distant lands with newfound free time, and possibly beginning the first real job on their career path.

Not every job is the same, but for the most part there are a number of things in common.

  • You need to make a positive impression on people you are meeting for the first time.
  • How you perform on your first job sets the stage for your work ethic.
  • If you stay in the same career throughout your life, your initial salary will be your most important negotiation.

Here are more specific tips for making the most of your first job.

1. Look the part. As much as it is superficial and stupid, people will judge you by your appearance. You need to dress and carry yourself in a manner that is expected and accepted by the people who work in your field. What is acceptable varies. If you work in banking in New York City, it’s almost guaranteed you will be expected to show up in a suit every day. If you work in the graphic arts, more liberal clothing might be acceptable. Find out what your manager or supervisor wears and emulate.

If you have not been accumulating attire during college, you may find the need to buy a variety of clothing at the last minute. This is one reason it may make sense to accept a controllable level of debt. Attire is a start-up cost associated with accepting a first job, and if you are required to dress well, your salary should cover these costs before long.

2. Negotiate. Graduates may be experiencing a “sellers’ market” while starting new careers this summer. With stories of the difficulty of finding a great job in the right field, it may be tempting to jump at the first offer. It is true that times like this call for adjusted expectations, but the dance of negotiation is an important and expected part of every job offer.

Not every job has this flexibility. For example, if you start as a teacher in New York City, your salary and benefits are determined by the union contract and you have no room for negotiation. If your first job is with a cash-strapped non-profit organization, you may face resistance. But the first salary offer you receive is almost always lower than the company’s true ability to pay.

The best suggestion is to be prepared to support your desire for a higher salary by researching your peers’ compensation and by explaining well the skills you can bring to the table above other candidates. As you may not have much experience in your field when you start your first job, you may not have a list of accomplishments, so be creative while being honest.

Here are tips for dealing with a low salary offer. Remember to look at the total compensation, not just the salary. You may have more wiggle room if you ask for more vacation days or for quicker establishment of your retirement benefits.

3. Enroll in your company’s retirement plan. When I started at the company where I currently work, I qualified for the company’s 401(k) on the day I began. Although a portion of my company’s matching contributions wouldn’t vest (become officially mine) until I had been working there for three years, my first paycheck included a deduction for my 401(k) and a matching contribution from the company. While enrollment is often automatic, some companies don’t start helping you put aside money for retirement until you tell them how much you want taken out of your paycheck.

Young adults with their first job often do not think about retirement, an event likely to be more than forty years in the future. Not enrolling in a 401(k) with matching contributions is the same as throwing away money. I understand that people who are just establishing themselves at work and in life have expenses, and retirement savings cuts into income. But putting aside two or four percent of your income — or up to the maximum matched by your employer — should not be a stretch.

4. Open an IRA. Your 401(k) contributions are taken right from your paycheck, so you might not even notice your money is being transferred to your future self. It may be more painful to your wallet to open an IRA, but if there is no pain, there is no gain. So open an IRA at a low-cost brokerage like Vanguard. When I started my IRA, I didn’t have the $3,000 minimum, so I jumped right in with TIAA Cref. I suggest saving money periodically in a special bank account until you have the $3,000 necessary to open an account at Vanguard because I have encountered some problems with TIAA-Cref.

If you already have a 401(k), open a Roth IRA. These two types of accounts have different tax treatment, and it’s good to diversify. If your company does not offer a 401(k) or its non-profit cousin the 403(b), split your money between a Traditional and Roth IRAs, if you can, to get the same tax diversification.

Your career and the skills and tools you use to thrive in that career are your biggest assets, even though you won’t see them measured on any balance sheet. Protect, refine, and showcase your self and your skills when you can. If your career is important to you, go above and beyond the call of duty.

Article comments

Anonymous says:

Good article. I would add one more tip.

5. Don’t expect to be there long. According to the BLS, for people born between 1957 and 1964, “younger baby boomers held an average of 10.8 jobs from ages 18 to 42.” Graduating college at age 22 and expecting to retire at age 67, college graduates should expect to change jobs every 4 years or so.

Whether it’s due to a layoff, a better job offer, or a change in career goals, we should all rid ourselves of the notion that we should be loyal to any one company. After all, the company is not loyal to us.

Anonymous says:

Enrolling in your company’s 401(k) is good general advice, but doing it as soon as you’re eligible is not necessarily the best thing to do. You should determine the best time to join based on your priorities and level of discipline with money. If you’re not disciplined enough to join when you’ve worked down your list of priorities and you think you’ll eventually be spending the money instead, then by all means, join as soon as possible. You’ll never miss the extra net income.

In my case, I waited about 9 months and enrolled during our plan’s open enrollment period. In that time, I paid down all of my credit card balances that I had accrued during college, reduced my debt-to-income ratio, slashed my credit-utilization ratio, and boosted my credit score. With the higher credit score I was able to open new credit accounts, with APRs significantly lower than my only card at graduation. By the time I bought my house, about 3 years after graduation, I qualified for the lowest rate possible at the time. A friend bought a house at the same time, but wound up with an interest rate 1% higher, which will cost him thousands over the life of the mortgage. The opportunity cost for waiting 9 months was about $1,000 from employer matching (actually only about $600 since I left before I was fully vested) plus tax.

My wife on the other hand is the complete opposite. She cannot manage her credit and has had to cancel all of her accounts but one card. She did not have a retirement savings account until she was automatically enrolled in the 401(k) at her most recent job. She spends every dollar she receives in her paycheck (half of it goes to paying down previous debt). The 401(k) contribution never makes into her hands, and she doesn’t miss it one bit.

Anonymous says:

Flexo – I do agree that contributing to a 401k is a great, especially if they match. But, in your opinion, if the company doesn’t have a match policy, is it still worth it to invest in a 401k when new graduates may need the extra income in their weekly paycheck? I understand the tax benefits, but I still think there should be an order of priorities (paying off high interest debts, saving for a house, getting used to new expenses, etc).

PS – I have been coming here for years and you provide one of the best blogs out there! It has really helped me to dramatically change my own financial situation and plan for the future, so thank you!

Anonymous says:

I like that #3 and #4 address what to do once you start your job — prepare for the future! Starting off by opening retirement accounts right off the bat are a good way to maximize your returns.

Anonymous says:

In re: to the negotiation tip… absolutely!

Their may be an excess of college grads out there, but not all college grads are created equal.

Companies are still willing to pay a premium for the right candidate.