What you need to know about spending — and saving! — your first paycheck

What not to do with your first paycheck

It can be tempting to treat yourself once you start working. Find out what you need to know before cashing in.

Getting your first paycheck can be exciting and empowering — you’re finally earning your own money. And while you may want to treat yourself on payday (who doesn’t?), expenses can add up. You want to be smart with your spending — and saving.

Here are five actions to consider taking with your first paycheck.

1. Set up direct deposit

Gone are the days of paper paychecks thanks to Direct Deposit. Direct deposit is super convenient, safe, and a faster way to have your paycheck deposited into your account. You won’t need to worry about checks getting lost, delayed, or stolen. All you need is your account number and routing number to set up direct deposit. And by setting up Direct Deposit with Wells Fargo, you’ll have Early Pay Day — letting you access your eligible¹ direct deposit up to two days early.

2. Create a budget

One good financial habit is to set a spending plan. If you’re a Wells Fargo customer, 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. You can also 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. Don’t know where to start?  We’ve created a college budget worksheet to get you started. 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. Make a savings plan

Paying day-to-day bills and covering your college expenses might take up a decent chunk of your paycheck, but you’ll also want to consider setting up a savings plan² for some of the money you have left over to help meet short- and long-term goals.

Make it easy on yourself by having 5% to 10% of your paycheck automatically deposited into a savings account. You can also set up an automatic transfer3 in your online banking portal if your Direct Deposit only sends money to your checking account. This will come in handy if you have any last-minute emergencies (like car repairs) or other expenses.

4. Know how overdrafts work

Whether you have a part-time job or are working closer to full time during school breaks, it may be easy to assume there will always be money in your account to spend. But it’s easier than you think to overdraw your account, which can quickly result in unwanted fees.

Overdrafts occur when you spend more money than you have available in your checking account and the bank pays your transaction. The bank, at its discretion, may authorize and pay overdrafts for checks, automatic bill payments (such as recurring debit card and ACH payments) and other transactions made using your checking account number.

By setting up Direct Deposit with Wells Fargo, you’ll also get the benefit of our Extra Day Grace Period4, which comes with consumer checking accounts. With Extra Day Grace Period, you have an extra business day to make deposits and avoid overdraft fees. If your available balance covers the prior business day’s overdraft items as of midnight Eastern Time, we’ll waive the associated overdraft fees5.

5. Learn about investing choices6

Putting some of that hard-earned money into a retirement plan such as an IRA (Individual Retirement Account) may also be worth a closer look. An IRA can be appealing, especially if your parents or grandparents want to help you start saving for retirement even before you’ve graduated from college. And it can be a great practice for after graduation when you have access to a workplace retirement plan, like a 401(k) or pension, or have gig income you’re investing for the future. A financial advisor7 can help explain what investment options can help you get on the right track to reach your near- and long-term goals.

One thing that’s a “must-do” with your first paycheck? Set up direct deposit.

Want to read more about building a spending plan after graduation?

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