Lesson 4.1

5 small steps to sort out your finances in your first job


Your first job is a great opportunity to set yourself up for future financial success.

Even small differences early on can compound over time and make a big difference to your future financial outcomes. Follow these five steps to get started.


Step 1. Set up appropriate bank accounts to receive your pay 

If you haven’t already, now is the time to open a bank account into which you can receive your pay. You have broadly two choices: a transaction or savings account. 

Always check the fees you may incur on any accounts, which may include monthly fees. 

Some online savings accounts reward you with higher interest rates if you make regular payments, such as your regular pay, and meet various other conditions. 

Step 2. Nominate your chosen super fund 

In addition to asking you for your bank account details to receive your pay, your new employer may also ask you to nominate a ‘superannuation fund’ into which they will pay ‘super’ contributions for you.

For most employees, employers are required to pay a percentage of your salary or wages into your ‘super fund’. Such super contributions are on top of the wages paid directly to you. Special rules apply to super, for example people aged under 18 and working less than 30 hours a week may not be entitled to super contributions by their employer. You can find out more about super at the ATO website or Fair Work Ombudsman.

Your employer may offer you a ‘default’ choice of fund, but it’s worth taking some time to investigate a low-fee, high performing fund with an asset allocation appropriate to your age. When you are young, you have greater flexibility to choose a ‘growth’ or ‘high growth’ investment option, as you’ll have more time to ride out the ups and downs of investment markets. See lesson 5.3 of our Protect module for more ways to protect and grow your super.

Step 3. Understand your pay slip (gross pay, tax, super payments, overtime) 

Be sure to carefully check over your first pay slips to make sure you are being paid what you were promised. This can include any overtime or super amounts.

Your pay slips will likely show a ‘gross income’ amount which is your total income before tax and tax paid to the Australian Tax Office (ATO) on your behalf. Your employer usually withholds tax (known as ‘Pay As You Go’ withholding) on your behalf from your salary or wages to help you meet your end-of-year tax liabilities to the ATO. If you don’t provide your Tax File Number (TFN) to your employer, they may withhold from your pay at the top tax rate. If you don’t have a TFN, you can apply for one here.

You will also need to file a ‘tax return’ to the ATO after the end of each financial year (which runs from 1 July to 30 June). See more information about lodging a tax return.

Be sure to keep any receipts for expenses you incur as part of your work, as you might be able to claim these expenses as tax deductions to reduce your taxable income. You can read more about common work-related tax expenses.

Step 4. Automate some savings 

It is a good idea to learn the discipline of regularly spending less than you earn and saving the rest. It can be tempting to spend your new pay on boosting your lifestyle and current enjoyment. 

But try to find an amount (a certain dollar amount or percentage of your pay) that you are happy to set aside regularly from each pay packet to save for longer term goals, like buying a car or a first home. Set up an auto-payment so you don’t forget it.

Step 5. Learn the confidence to negotiate your pay 

Over time, even small differences in your starting salary can make a big difference in your wealth accumulation. 

While the rates of pay in many jobs are linked to industry-wide standards or ‘award’ rates of pay, many jobs offer the opportunity to earn above standard rates of pay.  

Start to keep a list of your achievements and skills at work and ask for greater responsibilities. As you start to build up your portfolio, you can present a case to be remunerated accordingly.

It can seem scary to talk about money but just remember your worth and put your best foot forward! If you don’t have much luck, you can ask your employer to explain to you how the remuneration process works at your company and what you would need to do to move to the next level.


Congratulations, you’ve completed this lesson!

Next lesson: 4.2 - 5 small steps to build an emergency fund

Things you should know

  • This page provides general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as personal financial product advice. As the information has been provided without considering your objectives, financial situation or needs, you should, before acting on this information, consider if it is appropriate to your circumstances. You should also consider whether seeking independent professional legal, tax and financial advice is necessary.