What To Do With Your First Paycheck

Getting your first paycheck at your first job is exciting. You worked hard for it, after all - you earned it. And while the first thing you might want to do is treat yourself for all of your hard work, you might want to be a bit smarter about what you do with it.

If you're a recent graduate student or new to the working life, many questions will run through your mind: Am I budgeting the right way? What should I do with this money? It can be overwhelming to decide what to do and how to properly manage it.

Once you get your first paycheck, calculate your expenses such as groceries, transportation, housing, utilities, clothes and more. Keep a part of your check to pay for all the above for the next month and put the rest into your savings. Remember to also keep a part of it in your checking account in case of quick emergencies. If you realise that at the end of the month you still have some left over, add it to your savings.

Open a Saving Account and Set Up Auto Transfers

Opening a savings account will help you save a lot of money. A key step: Connect your debit account to your savings account and set up automatic transfers for the amount you'd like for every week or month. It's an easy way of saving money, and if you schedule it for each payday, you won't even miss the extra cash.

Also, consider setting up an additional emergency fund. It will help you to not rely on your credit card or loans in the event you need some quick cash. Build your fund over time and make sure you have easy access to it. Prioritise building your emergency savings at the beginning of your career, rather than contributing more to a retirement account.

Pay Your Student Loan

Depending on your repayment plan and how much you owe, set yourself a budget that will go towards your HECS payments each month (which should be automatically coming out of you paycheck - if not speak to your boss at work and make sure this is being taken care of).

Save (and Invest) for Retirement

It might seem early, but the time to start saving for retirement is now (read this for an illustration of why it's important). That could mean through a savings account or through investing in stock or propertoes.

The important thing to remember is that once you open an account and start putting money into it, you need to actually pick investments —otherwise it will just sit there. Here's a helpful beginner's guide to picking an investment plan (your HR rep should also be able to help you).

Here are some other things to remember:

  • Try to save a small percentage of your pay, even if you can only afford to save one per cent of your salary now. Anything helps.
  • That said, aim to contribute enough so that you can at least get the entire employer match, if your company offers one.
  • Pick your investments!

Treat Yourself

If after following all the above suggestions you have some money left and want to reward yourself for your hard work, go ahead! You've earned it. 


Comments

    I bought NHL 03 with my very first paycheck. What a great day...

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