Finance

Five Ways to Spend Your First Paychecks

At some point of our lives, we have that great moment when we finally had our independence and the thrill is big. For the first time in your life, your hard work finally pays off and you receive your first paycheck.

Now, you have the piece of paper in your hand – or the new balance on your bank account, and you’re trying to figure out what to do with it. The first impulse is to treat yourself to that little something you always wanted, and now you can afford it, the temptation is there, and it’s hard to ignore.

To help you navigate the financial stages you encounter after getting your first job, we have put together a quick guide on how to spend those paychecks well.

Always double check:

This is a no-brainer and a huge life lesson that you don’t want to learn the hard way. Every time you are handed money or valuable goods , make sure that everything is in the right place.

Handling a payroll division in a company is an extremely complex process that is not human-error proof, so now and then an employee may be given the wrong amount. Just try to make sure that the figure on your paycheck matches the one they told you to expect.

Paychecks usually contain other relevant information besides the amount you´re receiving or Total Gross. After that, you have Total Net which is the amount you get in your account after all deductions like national insurance and income tax. After that, you should see in detail the hours you’ve worked and the deductions.

It would be wise to be aware of your tax obligations, so you know how much will be deducted and why, so you don’t have any unpleasant surprises or misunderstandings. Try to make a habit of this,if it isn’t already, and always double check every time you receive money in any form.

Start saving!

This may be something we have heard ever since our parents started giving us advice. Now just because our parents kept repeating it, it does not mean it is not valid at all. In reality it is one of the best pieces of advice one can get, the problem relies upon the fact that, usually, people don’t realise this until they already wasted good years of saving by spending it all.

It doesn’t matter if you have never saved money before, or how much  you are going to save. The whole idea here is to create a habit that will literally pay off in the long run.

A smart way to get this done is opening a savings account with automatic transfers from checking to savings account – that way you don´t have to remember that you need to deposit money into your savings account, the bank will do it for you and, with high-interest rates, you can have some pleasant numbers ten years from now. Luckily you will not be automatically enrolled into PPI policies like banks used to do, so ensure you keep an eye out for this formerly commonly mis-sold insurance product.

An intelligent move is to open an additional saving account for emergencies, as that way, if the unexpected happens, you´ll have a place to turn to without compromising your life’s savings. The whole point is – for those new to the working world – to understand that time never stops running and you should start thinking about the golden years, as whilst they may be far away, they are patiently waiting.

Fancy a budget?

This is the best way to have control over the money you receive, as well as the money you spend. Calculate your expenses: food, rent, transportation, clothes and so on. . Make sure that you include that little something you use that isn’t a necessity but a regular spend, such as coffee dates with friends or bar hopping at the weekends. This is important because otherwise, the whole saving effort becomes something that lacks enjoyment and if you don’t have fun, then you´re doing things wrong.

As you can see, the idea is to have all bases covered, the fun ones and the others too. As a final recommendation here, try to live within your means, and always bet on frugal fun, gets the habit going and then it will be a really smooth process.

A Final Word

The rest of your life just started, so you have to play by the rules but do it with a twist – stay on top of your game and don´t let grown-up life overwhelm you. Live on a budget that has been carefully planned and learn to go through life learning about sacrifices and high-rewarding efforts. Kudos on this new stage and enjoy the ride of adulthood.