Everyday
Your first payslip: what to do with the first three salaries
The gross figure quoted at interview is not what lands in your account. The gap is usually around 15 to 30%.
Reading your payslip
Four lines explain almost the whole gap between gross and net:
- State pension and social contributions — the compulsory ones, deducted at source in most countries.
- Unemployment or national insurance — usually around one to a few percent.
- Workplace pension — often the heaviest line, and it varies with your age and the scheme.
- Income tax, if it is deducted at source — and if it isn't, you will pay it later, which means setting money aside.
⚠️ The pension contribution isn't lost: it is forced saving for your retirement. But it is not available, which is exactly why an emergency fund is still necessary.
The first three months, in order
- Month 1: decide nothing, record everything. You don't know your real spending yet. Setting a budget now would mean inventing numbers.
- Month 2: automate the saving. A standing order on payday, however small. What has to be decided every month never happens.
- Month 3: aim for one month of spending set aside. This is the goal that changes everything: it stops the first surprise becoming credit.
The first-salary trap: fixed spending settles at the level of your income within a few weeks — a pricier subscription, a bigger flat, a car. They are very hard to reduce afterwards. Wait three months before any lasting commitment.
Tax, if it isn't deducted at source
This is the classic nasty surprise of year two. With nothing taken at source, the tax arrives in instalments or all at once, and it commonly represents 10 to 30% of your income depending on where you live.
What to do: set that percentage aside from the very first salary, in a separate account. It is not savings — it is money that already isn't yours.
What can wait
Private pensions, investments, life insurance. All of it makes sense later. In the first three months only one thing matters: knowing where the money goes and building a first cushion.
Common questions
What's the difference between gross and net?
Commonly 15 to 30%, split between state contributions, unemployment or national insurance, a workplace pension and, where it applies, tax deducted at source.
What should I do with my first salary?
Nothing in particular: record your spending for a month. You cannot set a budget before you know your real numbers.
How much should I set aside at the start?
The amount matters less than having an automatic transfer leave on payday. Aim for one month of spending in reserve within three to six months.
Should I open a private pension straight away?
No. Build an accessible reserve first: money in a pension is locked until you retire.
What if tax isn't deducted from my pay?
Set 10 to 30% of your income aside in a separate account from the first salary, depending on where you live.
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