Getting that first paycheck is an awesome feeling. Not only did you land the job, but you’ve earned your keep. So how do you actually keep some of that money and not spend every last penny? We can help!
Paycheck Priority #1 Inventory Your Expenses
If you haven’t planned out your monthly expenses, start right here. (New hires, this is called a BUDGET.) You can find free printable bill charts online that’ll help you track what you consistently spend every month. If you’re old-school, this is a great way to strategize by just writing it all out. For the fancy-pants out there, many digital programs are available. Some spreadsheet types even go for an Excel doc. Whatever floats your banking boat!
Once you’ve sorted out your recurrent expenses, like rent, car payments, insurance, utilities, and any other boring bills, like student loans, take on your more fluid costs. What do you spend every month on gas, subway passes, or rides from Lyft? How about groceries, restaurants, and bars? Add in a cushion for some of these inevitable necessities and splurges.
Now, pay those set-in-stone bills! Make sure you send your money on time to keep your credit incredible. If you haven’t yet, set up your bills on automatic payment. That way, you’ll never be late. Punctuality! It’s impressive!
Paycheck Priority #2 Credit Card Payments
So you’ve paid your bills, set aside some cash for those everyday necessities, and wait a minute, that credit card bill is nagging at you. We know credit card debt is tough, but we also want you to know you can conquer it. You can! You’re a superstar!
Make sure you definitely pay the minimum amount due, but shoot for the highest payment you can afford. You’ll pay less interest and pay it off sooner…which leads us to the next step!
Paycheck Priority #3 Actually Save Some Money
Now for the fun part! No, this isn’t an all-you-can-shop buffet or a trip to your 17 favorite countries. This is a chance to SAVE. For those who find this to be a foreign concept, it starts with putting aside a little money for a rainy day. No, not a rainy day where you go and sit at a coffeehouse for hours. But an unexpected car repair or health condition or last-minute flight home for a family funeral. Not happy stuff to think about, but it’s life stuff, and it’s good to be prepared.
Put a little money every month into a savings account, additionally into a 401K, if you have the extra cash. Even starting with $5-$15 a month will add up. Build up the emergency savings and retirement fund, and you’ll be patting yourself on the back later.
Paycheck Priority #4 Special Purchases
Here’s the play-money part. We have your attention now, don’t we? If you’re thinking we’re crazy for thinking you’ll have any money at this point, well, you may be right. It takes a while to build up to where we want to be financially, so if you’re strapped for cash, hold tight for now. BUT, don’t forget your dreams! Also, believe in unicorns, if you have to. We do!
How about using this extra bit of income to save for that special thing you’re dreaming of? Your first new car, a pretty sofa, that trip-of-a-lifetime. More saving, you say? Yes. More saving = more happiness!
Paycheck Priority #5 Charity
Oh, and before we forget, this might be the place to show your compassionate side. Giving back to those in need is good for the soul, and it doesn’t have to be much. Do what you can afford, and give to an organization that speaks to your heart. Many people pair this step with their necessary bills. Do what works for you. And if you can’t manage to donate at your income level, there are always volunteering opportunities, activism events, and being a good human, in general.
We want you to be successful money managers, and while this is a basic guide to follow, we know you know best when it comes to your personal finances. Make a plan that works for you, trust your instincts, and keep working hard. Before you know it, you’ll be running the company! Trust us, we’re pretty good at predictions.
Here’s to your first paycheck…and here’s to many more!