Getting your first real-world paycheck can be exciting and empowering — you’re finally earning your own money to spend as you wish! And while you may want to treat yourself on that first payday (who doesn’t?), in reality, living on your own is pricey. You want to be smart with your spending — and saving.
Here are seven pieces of wisdom on what to do with that first exciting paycheck without going overboard.
1. Triple check your direct deposit info
Gone are the days of paper paychecks thanks to direct deposit. However, while automatic payments are super convenient, it eliminates the opportunity to check that your deposit and the information on your check is 100% accurate. Make sure to verify that HR has you listed to receive the correct compensation. Simply ask someone in the payroll department where you can view online paystubs and report any errors to them directly.
2. Set up a budget
One good financial habit to start as you begin earning more money is to set a spending plan. Tools like My Money Map can help you create a spending report — so you know if you’re overspending in a particular category like eating out — and set up a budget watch, which can help you create a personalized budget to track spending, set monthly spending goals, and stay in control of everyday finances. With a little upfront work to put these tools into place, you’ll quickly see where your money is going each month (and be able to course-correct if you’re overspending somewhere).
3. Set up a savings plan
Paying bills and making loan payments might take up a decent chunk of your paycheck, but you’ll also want to consider setting up a savings plan for some of the money you have left over.
Make it easy on yourself and have a percentage of your pay automatically deposited into your savings account, where it will be able to earn interest — it’s as simple as setting up an automatic transfer in your online banking portal. This will come in handy if you have any last-minute emergencies (like car repairs) or budgeting for upcoming trips and any other expenses.
4. Learn how overdrafts work
Once you get a regular paycheck, it may be easy to assume there will always be money in your checking account to spend. But, with different payments going out, it’s easier than you think to overdraft your account, which can quickly result in fees.
Wells Fargo has something called Overdraft Rewind® to help avoid overdrafts: When the bank receives your direct deposit by 9 a.m. local time, we will automatically include this amount in a reevaluation of the prior day’s transactions that resulted in a fee. So, in other words, if you overdraft on the 14th but get paid on the 15th, Overdraft Rewind will cover you.
5. Don’t be afraid to ask for help
Just because you’re new to adulting doesn’t mean you have to have all the answers. We’re talking about 401(k) plans, life insurance, and the complexities of the stock market. A financial advisor may be able to ease some of the anxiety that comes with choosing how to save and spend your money. They may be able to answer your questions — big and small — and put you on a path toward financial success.
6. Check out your company’s benefit package
If your employer doesn’t completely cover your healthcare costs, that’s okay — chances are, they offer a discounted rate. Take a look at the plans offered and decide which coverage is right for you. The monthly cost is typically taken out of your paycheck before taxes each month. And don’t forget about investment matches. Take advantage if your company is willing to match your 401(k) contributions.
7. Reward yourself when the time is right
Even though you might be ready to buy a killer new work wardrobe or the latest phone, consider holding off on any splurging with your first paycheck… at least at first. Although work can be taxing and you want to (and should) reward yourself, protect yourself from shopper’s remorse and initially stash your cash.
Wait until you have a few paychecks under your belt before making that first big purchase with the money from your new job. Spending in a responsible way, and waiting a little bit longer for your reward, just makes that treat yourself moment all the sweeter!
Overall, landing a paid internship or job is no easy task. At the end of the day, make all your hard work worth it by spending wisely.