Your first paycheck is a reward for all of the hard work you put into your new job and the initial job hunt. It also marks the beginning of your financial life, and an opportunity to create a money management system that will set you up for success in the long term.
But with new income comes new responsibility: Now that you’re done with school and working full time, you’ll probably have new bills, and maybe even student loan payments looming.
It’s totally understandable to want to treat yourself with part of your first paycheck—you’ll never have another first paycheck, after all! Just make sure that you’re being smart with the rest of it.
Here are four things you should consider doing with your first paycheck.
Set up direct deposit
You might get paid with paper checks, but it’s more likely that you’ll use direct deposit to access your money. Direct deposit describes any money transfer that takes money from the ‘payer’ and deposits it directly to the ‘payee’, like when your employer deposits your paycheck directly into your bank account.
It’s the simplest way to get paid on time and get access to your money when you need it.
To set up direct deposit into your Simple account, just follow these instructions!
Start saving for retirement
Only 36 percent of non-retired Americans feel that they are on track for retirement, while another 26 percent have no retirement savings at all. So? You literally just started your career - saving for retirement probably seems like a lifetime away, because it kind of is.
However, that doesn’t mean you should delay saving for your retirement years. If you retire in your mid-60s, you may live another 20-30 years! Check out NerdWallet’s retirement calculator to see how much you’ll need to have saved up.
To save that much, you’ll need to start saving ASAP.
Plus, the sooner you start saving, the sooner you can start earning interest on your retirement savings! As your savings have longer to grow, you will end up with even more money, thanks to the power of compound interest.
If you give your savings enough time to grow, you’ll only need relatively small contributions of money—made consistently—to wind up with a pretty big balance. Do future you a favor and start saving for retirement automatically starting with your first paycheck!
Create a budget for your monthly expenses
When you negotiated your salary, you are negotiating your gross pay—the amount you make before income taxes and other deductions are taken out.
The amount that’s actually deposited into your checking account is your net pay, or take-home pay. That’s the amount you’ll have to work with each month to cover your monthly expenses and start to build up your savings.
Use this simple guide to setting up your budget to learn how!
There are so many different ways you can use your first paycheck, most of them very adult and responsible. But getting a new job, and depositing your first paycheck into your account is exciting. If you want to celebrate, celebrate!
Then get back to business, you adult you!
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