Money & Budgeting

First Job Money Checklist UK — Graduate Finance Guide

Complete financial guide for your first job UK. Understanding payslips, tax codes, pensions, budgeting on starter salary, and building good money habits from day one.

By PocketWise · · 4 min read

Starting your first proper job? Here’s everything you need to know about money.

Understanding Your Pay

Gross vs Net Pay

Term Meaning
Gross salary Before deductions
Net pay What you take home
Deductions Tax, NI, pension, student loan

Example Payslip Breakdown

£28,000 Salary (Monthly) Amount
Gross pay £2,333
Income Tax £257
National Insurance £116
Pension (5%) £117
Student loan (Plan 2) £57
Net pay ~£1,786

Key Payslip Items

Item What It Is
Tax code Determines tax (1257L is standard)
NI number Your unique ID
NI category Usually ‘A’
YTD figures Year to date totals

Tax Basics

What You’ll Pay (2025/26)

Income Band Tax Rate
£0 - £12,570 0% (Personal Allowance)
£12,571 - £50,270 20% (Basic rate)
£50,271 - £125,140 40% (Higher rate)

National Insurance

Earnings NI Rate
Below £12,570/year 0%
£12,570 - £50,270 8%
Over £50,270 2%

Tax Codes Explained

Code Meaning
1257L Normal (£12,570 allowance)
BR All pay taxed at 20%
0T No allowance
W1/M1 Emergency/week-month basis

If Wrong Tax Code

Signs Action
Much less pay than expected Check code
W1/M1 on payslip Emergency tax
Contact HMRC or employer
Refund Will come through pay or rebate

Student Loans

Repayment Thresholds (2025/26)

Plan Start Repaying Above
Plan 1 £24,990/year
Plan 2 £27,295/year
Plan 4 (Scotland) £31,395/year
Plan 5 £25,000/year
Postgraduate £21,000/year

Repayment Rates

Loan Type Rate
Plan 1 9% above threshold
Plan 2 9% above threshold
Plan 4 9% above threshold
Postgraduate 6% above threshold
Both? Both deducted

Example: Plan 2 on £28,000

Calculation Amount
Income £28,000
Threshold £27,295
Above threshold £705
9% of above £63/year (~£5/month)

Workplace Pension

Why You Should Stay In

Benefit Value
Employer contribution Free money (min 3%)
Tax relief Boost your contribution
Compound growth Decades to grow

Minimum Contributions

Who Pays Minimum
Employer 3%
You 5% (4% after tax relief)
Total 8% minimum

Example: £28,000 Salary

Contribution Annual Amount
You (5%) £1,400
Employer (3% free) £840
Tax relief boost ~£350
Total into pension ~£2,590

Auto-Enrolment

What Happens Detail
Automatic You’re enrolled
Can opt out But shouldn’t usually
Re-enrolled Every 3 years if opted out
From Usually after 3 months

Your First Budget

Typical Graduate Budget (£1,786/month take-home)

Category Amount %
Rent £700 39%
Bills (energy, internet, phone) £150 8%
Groceries £200 11%
Transport £150 8%
Savings £200 11%
Debt repayment £50 3%
Everything else £336 20%

Living with Parents

If Rent-Free/Low Opportunity
Save more Build deposit fund
Pay off debt Clear faster
Emergency fund Build quickly
Don’t lifestyle creep Save the difference

Building Emergency Fund

Target

Goal Amount
Initial target £1,000
Then 3 months expenses
Long-term 6 months expenses
Typical £4,000-6,000

Where to Keep It

Account Type Why
Easy access savings Instant access
Not current account Separate from spending
Decent rate Check best buys
Not invested Need stability

Savings Priorities

Order of Priority

Priority What
1 Get employer pension match
2 Pay off high-interest debt
3 Emergency fund (£1,000)
4 Full emergency fund (3 months)
5 Additional savings/investing

Where to Save

Type Purpose
Emergency fund Easy access saver
House deposit Lifetime ISA (25% bonus)
General savings Cash ISA
Long-term Stocks & Shares ISA

Banking Setup

Account Purpose
Main current account Salary in
Bills account Standing orders
Savings account Emergency fund
Spending account Weekly budget

Good First Banks

Bank Why
Monzo Good app, budgeting pots
Starling Great features
Chase 1% cashback spending
High street If prefer branches

Standing Orders

Set Up For
Pay day To bills account
Pay day To savings account
Pay day To spending account
Automate So you don’t forget

Credit Score

Building Credit Early

Action Impact
Electoral roll Register immediately
Direct debits Shows reliability
Credit card Small, pay in full
Phone contract Counts if in your name

Mistakes to Avoid

Don’t Why
Miss payments Damages score
Max out credit High utilisation bad
Apply for lots Multiple searches hurt
Ignore it Affects future borrowing

Avoiding Debt

Good vs Bad Debt

Good Debt Bad Debt
Student loans Credit cards carried
Cheap mortgage Payday loans
0% finance (if needed) Car finance (if unaffordable)

Danger Signs

Warning Action
Credit card not paid in full Budget problem
Using overdraft monthly Cut spending
Borrowing for basics Seek advice

Employee Benefits

Check What’s Offered

Benefit Value
Pension match Take maximum
Cycle to work Tax-efficient bike
Season ticket loan Interest-free travel
Health insurance Can be valuable
Gym discount If you’d use it
Shares scheme Often good terms

Tax-Free Savings

Lifetime ISA

Feature Details
For House deposit or retirement
Bonus 25% on up to £4,000/year
Max bonus £1,000/year
Withdrawal For first home penalty-free

Cash ISA

Feature Details
Tax-free Interest not taxed
Allowance £20,000/year (all ISAs)
Access Easy (most)

Summary

Week One Actions

Task Done?
Check payslip is correct ☐
Understand deductions ☐
Join workplace pension ☐
Set up budget ☐

Month One Actions

Task Done?
Open savings account ☐
Set up standing orders ☐
Start emergency fund ☐
Register on electoral roll ☐
Check benefits offered ☐

Year One Targets

Goal Target
Emergency fund £1,000+
Pension Stay enrolled
Budget Living within means
Credit score Building steadily
Savings habit 10%+ of income

Key Numbers to Know

Number What
£12,570 Personal Allowance
£27,295 Plan 2 student loan threshold
8% Minimum pension contribution
25% LISA bonus
3 months Emergency fund target

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Sources

  1. MoneyHelper — Everyday money