Your First Paycheck: What NOT to Do

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You graduated. You landed the job. You survived your first two weeks as a new employee. And to show for all that blood, sweat and tears, a few new numbers have shown up in your checking account – the direct deposit from your hard-earned first paycheck. But if you want that paycheck (and all your future paychecks) to truly count, you'll have to use it with care.

We can't tell you exactly what to do with your first-ever paycheck, but we can tell you what not do to, as follows:

Spend It All

It's just this once, right? You spent four years paying a university to give you work, and now you're finally getting paid to work, so what's wrong with a little celebration? Splurge. Buy new boots. A new phone. A night out (for your friends, too). You can start being responsible when you get your second paycheck. What's the difference, really?

As editor David Waring told Career Builder, there's nothing wrong with a little celebration. But it's important for new workers to ease into life with a steady income. They should get a feel for their new lifestyle before taking full advantage of it, and for many, it's too easy to slip into the habit of living beyond their means – and very difficult to backtrack after that. Counter that by creating an intentional plan for your paycheck.

Play It By Ear

Don't spend your first paycheck based on whims. Have a plan of action for it. Finance coach Kate Horrell told Career Builder that new employees can build a splurge budget into their plan for that money, but should otherwise know exactly how it will function in their lives.

For example, you might plan to immediately put 10 percent of your paycheck into a savings account. Right off the bat, you might also set aside what you'll need to pay your rent, bills, loan payments and other necessary expenses (plus a celebration budget – after all, this is a special paycheck). Use your first check as an opportunity to create some healthy spending habits, which will make life easier on you going forward.

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Ignore Your Debts

Sure, you have a little money now, but you're not made of it, and you have to pick and choose where it goes. If you have debt, those bills might seem a little less urgent than those for utilities and rent – but they still need your attention. Inc recommends that you "snowball" your credit card and loan bills, and follow a strict budget in doing so. Allot a certain amount of your paycheck to debt repayment, and use it to pay the minimum due on everything but one bill, on which you pay the most you can. When you pay off that bill, reallocate your debt repayment budget so you're paying the maximum on a different bill, and so on until those bills are gone. And, most importantly, don't go into further debt during this time.

Get Rigid

Yes, you want a plan for your paycheck, and no, you don't want to spend it by ear, but that doesn't mean you need to live in the prison of some crazy-detailed Excel spreadsheet budget. Brianna McGurran of NerdWallet suggests instead that you create a general guideline to use as a budget. For example, some workers implement the 50/30/20 rule, which means spending 50 percent of your paycheck on necessities (including student loan bills), 30 percent on fun stuff and 20 percent on savings or debt repayment (besides student loans).

Spreadsheets, on the other hand, can become cumbersome, time-consuming, confusing and hard to follow. Your paycheck plan should have some degree of flexibility, because life doesn't follow a rigid schedule, no matter how much you might want it to.

About the Author

Brenna Swanston is a freelance writer, editor and journalist. She previously reported for the Sun newspaper in Santa Maria, Calif., and holds a bachelor's in journalism from California Polytechnic State University.

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