You aced the interview, you signed the contract, and you’re starting out in your very first “grown-up” job. It’s exciting. The chance to flex and grow your skills, develop your portfolio, and . . . that sweet and steady paycheck hitting your bank account every two weeks. You have made it. But what should you do with what you’ve made?

Even if you’re feeling flush right now, it’s important to understand how to make your money work for you in the short and long terms. Although it’s easy to say “I’ll put it off and figure it out later; I’m not retiring for decades”—or you’ve always figured that marriage or a long-time relationship is a great point on the horizon for overhauling your finances—there are myriad steps you can take at any stage of your life to set yourself up for success. Once you begin understanding that making your money work for you is satisfying, rather than a chore, a world of opportunity and empowerment opens up.

I took my first job out of college two years ago. So I’m a relative “newbie” when it comes to savings and financial planning. But here are a few of the best savings lessons I’ve learned in the past two years.

In the short term

  • Create a savings plan: Take out a pen and pad of paper or a cute notebook (or open a Word doc), and start planning. The easiest way to start is to figure out how much “excess” you’ll have each month. I recommend saving a fixed amount each month; think of your savings contribution as a guaranteed monthly expense, whether it’s $50 or $500. It’s the “pay yourself first” mentality, making it easier to track and consistently build your savings.

    But how do you figure out what that savings number should be? I begin by adding my two monthly paychecks together to get my total monthly income. Then, I subtract my monthly expenses (rent, utilities, insurance, and student loans). Each month, I also have a rough estimate of how much I expect each credit card payment to be, and I also deduct this amount from my monthly budget. Now you have to figure out what to do with that remaining balance. You could designate that entire amount as savings. Once you’ve figured out that number, you can add that “savings” amount to your expenses next month. Then, anything that’s left over after you deduct your expenses from your income is a cherry on top: a little extra cash for you to spend as you will.
    But it’s also important to create a savings plan you can actually execute. So, after subtracting your monthly expenses and payments, you might consider deducting some “mad money”: money set aside each month for you to do whatever the heck you want with. And then, after deducting your mad money, whatever is leftover becomes your standard savings amount.
  • Keep at least $1,000 out of your checking account: I’m embarrassed to admit it, but a year ago, I didn’t have a savings account. I kept everything in my checking account (thanks for setting that up when I was 14, Mom!). But I struggled to keep track of everything going in and out. This January, I researched different savings accounts and opened one for free through Discover, where I already had a credit card. This plan, for me, offered a higher annual percentage yield (APY), which means I’ve earned almost $30 in interest this year simply by putting that “excess” money from my checking account into my savings account each month. Although I’ve pulled from my savings from time to time, I like to keep at least $1,000 there, where it can gain interest and be a backup for emergencies.
    • $1,000 is a great start for your savings, but building up an emergency fund from that is a key for success. For example, a few years ago, I experienced car troubles that set me back over $1,000. I was close to wiping out my savings account, but thankfully, I’d been contributing to my savings each month (paying myself first!) and was able to cover the expense out-of-pocket for this unexpected payment.
    • Know how to say no: This may seem like simple advice, but learning how to say “no” will save you money and stress in the future. Grabbing dinner or drinks with friends and coworkers isn’t something to be feared, but it can easily add up. For me, this means setting a one-drink limit for myself at restaurants and bars (especially in Chicago, where drinks can easily run over $10!). I never go to the grocery store without a physical list written in pen. Organizing my grocery list by what I need for each meal, plus a small section for miscellaneous purchases, helps curb my urge to throw random things in the cart just because they’re on sale. If it’s not on the list, don’t get it!
    • Earn a little extra: If you’re comfortable with having your shopping tracked, I recommend using Honey and Rakuten, two browser plugins that scan sites for discount codes and cashback options. For example, Honey allows you to buy instant “gift cards” from them for a discount price when you’re checking out at a store. You then pay with the gift card, instead of your credit/debit card, and save around $5 on average. Once you’ve used them enough times, you can earn gift cards to your favorite retailers through Honey (I just cashed in a $20 Target card!) or receive a check in the mail from Rakuten for the cashback you saved.

    Of course, internet plug-ins aren’t the solution to building a healthy nest egg, but they’re great additions for when you’re making a purchase that’s already built into your budget. Use them as healthy “extras,” rather than an excuse to make additional purchases outside of your savings plan.

    In the long term

    • Max out 401k contributions: Although retirement is most likely many years down the road and it’s tempting to spend now (who doesn’t love the dopamine hit of getting a great deal?), your future self will thank you for saving so early. When I started my job after college and signed up for my company’s 401k plan, I chose to contribute the max percentage allowed for each paycheck, which my employer generously matched up to a certain percent.

      • I’ve been at my job for just over two years, and I am proud of how my retirement savings are already growing nicely, even though I’m only 24. Electing to have that money taken out of your paycheck before it even hits direct deposit is an easy way to save for the long term—out of sight, out of mind, but in the best way! If you’re just starting out, I recommend reading about the differences between Roth IRAs and traditional IRAs to find out what works best for you.
      • Stock option? Take it: Many companies will offer employees opportunities to purchase company stock as part of purchase plans, which you can read about here. When my company first offered this, I brushed the option away, not fully taking the time to understand what a boon this could be.

        • If you truly believe in your employer’s work and success—and are willing to stick it out for the long-term gains of the stock market, not just the present-day pitfalls, this is a great option for your money. These investments will most likely yield more money in the long run than even a high-yield savings account. Sure, there’s inherent risk involved, but investing for the future is a way to let your money work for you—rather than sitting in your closet as a twice-worn pair of last season’s shoes.

        Although these steps are all things I recommend from my own experience, you’re in control of your money! Everyone’s path to saving is different, and I hope these ideas help you build your savings toolbox. 

        Would you benefit from being more intentional with your money? Verily Cents is a twice-monthly email newsletter that aims to help you align your finances more closely with your goals and values. Each email focuses on a single topic and ends with a small action item—so you can invest in your future, one approachable step at a time. Subscribe here.