Congratulations! You’ve got your first real job, and now, finally, you’ve got your first real paycheck. Time to go out and celebrate!
Hold on a second, though. You can (and should!) celebrate getting your first paycheck, but once you get your first paycheck there are some things you should do that will put you firmly on the path to financial success.
Step 1: Set Up Direct Deposit
Before you even get your first paycheck, make sure you set up direct deposit so you can get your paycheck sent directly to your checking or savings account. This has a lot of advantages. In addition to reducing the risk of having your paycheck lost or stolen, you also get immediate access to your money without having to cash a check and you can even have your paycheck split up between accounts.
Step 2: Set up a Budget
If you’re inwardly groaning at the thought of setting up a budget, don’t worry, you’re not alone. A lot of people cringe at the thought of setting up a budget, and they have several reasons for doing so.
However, making a budget gives you some financial advantages that will make your life a lot easier. In addition to being able to spend money on things you want without worrying whether you can afford them, you’ll also be able to channel more money to financial goals that are important to you, like buying a car, getting some new furniture or just being able to go on a nice vacation. Most importantly, you’ll be in control of your money, and the peace of mind you get from that is priceless.
Step 3: Start Saving
While you’re making your budget, you’ll want to make a category for saving money. If you’re like most people, you’re probably groaning yet again and wondering if you can’t find a blog post that talks about a more fun topic, like what to do if you win the lottery.
Before you go away, though, ask yourself one question—do you have enough money available to take care of a major expense? If you got into a car accident, would you have the money to get your car repaired? If you broke your arm, would you be able to pay the hospital bill?
If your answer is anything other than “absolutely,” you need to save part of your paycheck so you can handle any emergency from a minor home repair to being laid off. If you have zero experience saving money, you can start by putting aside 10% of your paycheck in a savings account. If you have any money left over in your budget, devote that to your savings account too.
Your first savings goal should be $500, but most financial experts say that to be truly ready for an emergency you should have between three to six months of salary set aside. Once you have that much set aside, you can use the money to focus on other financial goals.
While we’re on the subject of saving, it’s also worth pointing out you should also start saving money for your retirement. This may be a long way away, but the more you put in now, the more time you’ll have to let compound interest work its magic. If nothing else, you should at least be putting money into your company’s retirement plan.
Step 4: Reward Yourself
So finally, you have your paycheck direct deposited into your account, you’ve set up a budget and you’ve got some money saved away.
Now’s the time to treat yourself. Take out some money from your restaurant budget, some money from your entertainment budget and hit the town.
While you’re out celebrating, take a second and pause to reflect on how good it feels to not have to worry about how much money you’ll have left in your paycheck for the rent, the electric bill, your car loan or gas money. This may sound corny, but once you’ve experienced that peace of mind you won’t want to go back.
Stretch Your Paycheck Further With First Alliance Credit Union
There’s no feeling quite like getting your first real paycheck. Before you run out and spend it, though, take a few minutes to budget, save and make sure your paycheck is directly deposited into your bank account. If you do so, you’ll be firmly on the path to financial success.
If you want to make sure you’re getting the most out of your paycheck, become a member of First Alliance Credit Union today. In addition to setting aside money in one of our traditional savings accounts, you can use the My Money feature of our online banking platform to make setting up a budget easy. You can even set up an IRA for your retirement.