Allocating money as a young professional: How not to spend the entire salary

Can you train how to deal with money – and learn to divide wages or salaries so that there is still some left over at the end of the month? We asked Monika Müller that. She is a financial psychologist and supports people with financial decisions as a coach.

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SPIEGEL: Five of my closest friends started their first real job this year. A lot should change with the new salary. They finally wanted to repay their siblings’ debts or set aside money for the future.

Half a year later they tell me that they spend their full salary every month and in the end they are wondering what for. What happened?

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Monika Müller: Getting your first salary is like having a full plate in front of you in a restaurant. One begins greedily to take advantage of it. It’s good for you and makes you happy. Rational aspects, such as the fact that you still have to pay the bill or should make provisions for the future, take a back seat. First of all, enjoy it.

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SPIEGEL: Why is that?

Müller: Getting into a new job is incredibly stressful on the brain. It has to process a lot of new information, processes and people. Complex considerations such as old-age provision are too much of an expense at the moment and are therefore postponed.

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A new experience

SPIEGEL: So we spend our salary without thinking.

Müller: Yes, and I believe this experience is important. I don’t think it makes sense to start out in the working world with a fixed financial concept. You need the openness to first try out dealing with money.

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SPIEGEL: Many students earned their own money with part-time jobs during their studies. Why is it so difficult for young professionals to deal with their salaries?

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Müller: Because they are in a completely different situation. When you start your career, you spend a lot more time at work and maybe for the very first time you will be fully responsible for a company. The organism uses all its energy on this. It is very natural. But it is important to create a little distance after a certain time and to deal with the salary.

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SPIEGEL: Psychologists say that young professionals have to practice work first. Can you also practice dealing with your salary?

Müller: Exercising sounds too strenuous to me. I recommend experimenting. I did it this way myself at the time: A few months after starting my career, I thought about what amount I could take out of the spending process each month. I moved it to another account. And then I observed: How do I deal with it? Do I want to do this permanently?

Separate accounts

SPIEGEL: So I’ll transfer money directly to another account when I get my salary. And then?

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Müller: The idea is to use both accounts consciously instead of automatically spending money. By weighing up what amount I really need and which one I put on the long-term account, I become more attentive. I can see: What is the relationship between everyday and long-term accounts? Do I have to transfer something back?

As a result of these actions, I stay in a medium attention span, as it is said in psychology: I don’t care about everything, but I’m not very tense either. In a medium attention span, we react wisely and organize ourselves best.

SPIEGEL: What else can help with the organization?

Müller: An annual plan can be useful in which to list what amounts are due each month and what only once a year. Insurance for the car, for example, falls into the latter category. A topic plan can be created for the everyday account, for example as a mind map. Then there are branches with vacation, future, debt, and so on. Then you think about which amount should be spent in which month with which goal. You should do that in writing. Our brains work best when our hand is doing something.

SPIEGEL: And then everything works by itself?

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Müller: Young professionals have almost a lifetime of experience with money, for example with pocket money. This wealth of experience comes back. The aim is to get an intuitive clarity of what way of dealing with money suits you and to develop unconscious patterns.

SPIEGEL: What if I’ve always had trouble dealing with money?

Müller: Perhaps then there is simply a lack of knowledge, for example how to set up an investment savings plan. Then I advise you to read up on the Internet, there are offers there enough. Sometimes, however, it is also due to emotional hurdles if, for example, you simply do not pay back your siblings. They are of course very individual. It can help to sit down with professionals, such as a fee advisor or a finance coach.

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Reward yourself?

SPIEGEL: After a busy week, I often want to reward myself and buy something nice. Is that bad?

Müller: The question is, what is the motive behind this wish: Do you want to satisfy a need that cannot be met with a purchase? If you are actually looking for appreciation from your superiors, you shouldn’t give yourself the reward, but ask for feedback from others.

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SPIEGEL: What if I just find that I’ve done a lot during the week?

Müller: Here, too, you should research what is really good for you. Maybe it’s not the part you buy, but a short pause at the end of the week. Then the conscious thought that you did a really good job this week could make a big difference.

Icon: The mirror
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