New job? Here’s how to spend that first paycheck. (Hint: try to do the opposite of this)
Posted by Gen FKD on Friday, August 3, 2018
Getting your first full-time job is an unforgettable experience. For many, it’s the first time to finally be independent. A moment where all your hard work has finally paid off. You’re officially entering the real world. But what’s the best part of finally having that full-time job? Making the money. Once you get that first paycheck, many things might go through your head. You might want to go out and start spending it all right away or you might want to save every single cent. What do you do when you want to save for your future but still want to pay for the things you want?
Well, the answer is, to be responsible and manage your money. Find ways where you can save without withholding all of your wants and needs. You still can save money and have a good time while you do it.
The first thing you should plan to do with your first paycheck is to start paying off your debt. From credit cards to student loans, you want to get out of debt as soon as possible. If your debt is extremely high, create a weekly plan to save up a certain amount to pay off your debt. You also want to avoid getting into any more debt. Don’t spend money that you don’t have. Credit cards can be beneficial to make purchases you can’t pay for right away from time to time. But if you spend too much money that you don’t actually have, you will run into trouble. You will either run into a scenario where you have to pay off your debts every paycheck and you will have no actual money or spend way too much and be in debt for a long period of time.
Life is also unpredictable. You don’t know what will happen in the next pay period — you might get sick, you might have to travel, you might not get paid for a week. You don’t want to have money you desperately need the next week to disappear because you made a big personal purchase. Focus on the money you have now and try not to spend the money of the future.
Track your spending and cut unnecessary costs
Ever run into a situation where you thought you had way more money than you actually did? Track your spending. Figure out how much you’re spending each week and on what. If you’re looking to save, you can figure out what you’re regularly purchasing that’s unnecessary and cut it. For example, if you don’t really need to have Starbucks every morning, you could save hundreds of dollars a year by making your own coffee. Look for alternatives to what you are spending week to week. Are you going to $30+ events with friends? Or are you buying lunch every day? If these expenditures aren’t priorities to you, look for alternatives such as going to free events or making your own lunch.
Create your own budgeting system
Having a general guideline of how you’re going to spend your money week to week will help you successfully manage your cash. A budgeting system could be used to allot earnings from your check toward your needs, savings and personal spending. A popular system used is 50-30-20. In this system, you would have 50 percent of your paycheck go to your day to day needs such as groceries and care products. Thirty percent would go to your savings to help pay for your long- and short-term goals. And the final 20 percent to be used for personal spending such as a video game you want or movie tickets.
Getting your first couple of paychecks is an exciting time. You have more money than ever before. While you should spend your money on things you need and want, you have to be smart about it. Figure out what’s important to you both in terms of needs and wants and see how much that adds up to be. If that number becomes too high, you look at alternative ways to save, such as not going out to eat. As long as you are proactive in your budgeting, you will be able to save big and spend your money on what you want without compromising your future.
Have something to add to this story? Comment below or join the discussion on Facebook.
Header image: ShutterStock