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 — and some to take every paycheck.

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 receiving 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 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. 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. 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 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 plan 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 pay automatically deposited into a savings account — 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 other expenses.

4. Learn 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 overdraft your account, which can quickly result in unwanted 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. Learn about investing choices

Putting some of that hard-earned money into a retirement plan such as an IRA (Individual Retirement Account) or investing in the stock market 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 advisor 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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