Updated on 05.21.11

Handling the First Flush

Trent Hamm

When I graduated from college, I was lucky enough to have a job that I more or less walked straight into. I had about two weeks off between graduation day and the start of my new job.

That new job paid far more per hour than any job I’d ever had – and it was full-time, too. Up until that point, all of my jobs had been part time jobs.

The result? I was suddenly bringing in many times more per paycheck than I ever had in my life up to that point. I was flush with cash for the first time.

Unsurprisingly, I spent it. I bought lots of unnecessary things. I put down a solid down payment on a big pickup truck. I bought a bigger television and a new video game system. I took my wife on a trip to London where we stayed in a hotel within walking distance of Westminster Abbey. I eventually wound up establishing a spending precedent that got me in a lot of financial trouble.

Simply put, I didn’t handle my first time of being flush with cash very well.

What should I have done?

First, I should have respected that desire to spend. It’s something that happens for almost everyone. They get some cash. They celebrate because of it. They buy a bunch of things. Often, they end up regretting it a bit. If you ask anyone about their first job where they made real money, most of them will tell you some version of this story. The more you know, the more you can be ready for it.

Second, I should have put a plan in place, right off the bat. I don’t think there’s anything implicitly wrong about spending that money. However, if you plan for it a little bit, it doesn’t have to turn into a situation where you endanger your financial future just to have a little fun.

I recommend putting a simple automated budget in place when you get your first paycheck. Here’s what I would do.

1. Choose a bank that has robust online banking services. These services should include the ability to set up automatic transfers to other linked bank accounts. I use ING Direct, which offers these services.

2. Set up a series of transfers based on your goals. I would suggest a setup in which you have two checking accounts. One of them is the primary place where your paycheck goes, while the second one is the one where you can spend freely without any worries. Set up an automatic transfer of some portion of your paycheck from the first account to the second. You should also set up automatic transfers from that first account into savings accounts for your various savings goals, like saving for a car, saving for a house down payment, and so forth, depending on your plans.

3. Spend from the “free spending” account to your heart’s content. Buy whatever makes you happy – for a while. Eventually, there’s a good chance you’ll reach a point where your values will shift a bit and you’ll start to desire long-term security and the elimination of debt. At that point, just reduce the amount you transfer into that “free spending” account and increase the amount you’re transferring to other goals.

There’s nothing inherently wrong with wanting to spend more when you get your first good job. There is something wrong, though, if you spend most of – or all of – your newfound income. Get yourself in control of the ship right off the bat and you can have a lot of fun without putting yourself on a dangerous path.

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  1. Katie says:

    I have a question about automatic transfers. Does anyone know if there’s a reliable way to set these up if you get paid bi-weekly instead of on a particular day of the month? I’d love to automatically set it up so that, say, the Monday after I get paid, several automatic transfers go through but I’ve never really figured out whether this is feasible.

  2. kjc says:

    OMG I thought it was going to be a post about toilet training!

  3. valleycat1 says:

    #1 Katie – we use Wells Fargo, and their automatic transfer scheduling options include ‘every other week’, where the account owner selects the start date. So if my next payday was, say, May 27th, I could schedule automatic transfers beginning May 30th, timed every other week. You can also easily cancel one transfer in a series without canceling/restarting the entire series. My guess is that just about any large bank has this option – if not online do-it-yourself, then if you contact your bank to set it up.

  4. kristine says:

    I jiggle the handle.

  5. Ryan says:


    I do exactly what you’re talking about with my ING checking account. You have the option of weekly, bi-weekly, monthly, etc. If you get paid let’s say on May 25th, you can tell ING Direct to start a transfer to savings on the 25 or 26th (just in case) and then bi weekly after that.

  6. Marta says:

    That is great practical advise. We’ve moved every 1-3 years since marriage 10 years ago and every place has a new income attached. That first year is always so stressful coming up with a good budget and knowing how those paychecks will stretch in that city’s cost of living (like power, gas, food, etc…). Also the two checking accounts thing is SO HELPFUL. My husband does not like to be bothered with understanding the concept of reconciling a checking account, or budgeting. Thankfully he gives me those responsibilities and tries to live within them, but once we gave him a separate account to spend from (gas, extras) it helped me so much. We are on a tight tight budget and I can’t have surprises!!!! Before we did this we relied on a “bounce proof” checking account attached to a line of credit. Once we moved to a town that had no banks that would give you one without going a year without a deficit. Those two years were tough and full of lots of extra charges due to poor communication between my husband and I on spending. We were never able to achieve one month, much less 12 without a deficit. It was such a waste. After we had the two accounts we’ve very rarely had a surprise. And neither are “bounce proof”.

    Thanks for the advise in this post, it will come in handy after our next move in 14 months to a new higher paying job. I’d love to live at the same spending level, but eradicate medical school and educational debt as quick as possible!

  7. ChrisD says:

    When I got my first job it was abroad. I moved to Germany with 200EUR, a job and accommodation provided (not free, but no urgency to pay it in advance). Paying the deposit on the flat, (spread over three months) buying and building a whole new kitchen (flats in Germany usually come without them) and all my furniture kept me on a very tight budget for some months (my workplace also gave me a short term loan of two weeks wages and paid my first two weeks as soon as I arrived). Managing to achieve all that without savings is one of my prouder moments. Once all that was achieved I was well established in frugal spending.

  8. Justin says:

    I took out a $25K loan a few years ago at just 2% interest.

    While I did use it to pay off a decent amount of debt, I also squandered a decent amount as well.

    Its so easy to think you’ll just invest a windfall of cash or pay off all your debt, but to put it into practice is much more difficult!

  9. Annie says:

    I use automatic transfers from my Wells Fargo bank to ING direct. ING allows you to transfer money monthly, bi-weekly or on a specific day. I have it taken out every other friday which is when i get paid and the money is in my account by Monday. Almost all banks have this option, Bank of America also has a transfers plan that is reasonalbe but i am not so happy to own their checking account. They want a direct deposit on a checking otherwise they charge 8.95 a month, you have the option to go e-banking which is free. Hope this helps.

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