Congratulations! You have graduated and have landed a great new job. Woohoo! Finally, all those years of hard work and dedication have paid off and now (I hope) you are earning a bigger paycheck. It is always exciting to receive your first paycheck – an indication that you are now independent and are a productive member of the society. You can easily get tempted to go on a spending spree after having all the extra money, but how about considering some better options?
Here are some tips for new grads on how they should spend their first paycheck:
Check the paycheck
In the excitement of earning your first real salary, you might actually forget to check if the paycheck is accurate. You do not want to take chances with the possible errors that the HR or Payroll people made. Check if the rate is what they mentioned in your offer letter, if not, bring it to their attention immediately. And remember, you need to do that even if they have accidently paid you more because they may ask you to payback the amount.
Figure out a savings account
I know, I know, you have been waiting for this bigger paycheck since long so you can finally buy all the things that you once wished to buy. You might want all the cool stuff, getting a lavish place, upgrading your wardrobe, but you have to put minimum 10 percent of your income in your savings account. If you start from your first job, it won’t be that painful, so it’s better to start early.
Calculate the deductions
You should know the difference between gross pay and net pay before you get your first job. If you are not already aware of the difference, you will be shocked when you see the gap in your first paycheck. You should know how much amount is deducted due to taxes and benefits like 401k. If you think you don’t require 401k, think again. A matching plan is like free money, and who doesn’t love free money?
You have earned it and you deserve to reward yourself with whatever you want (and can afford), may it be clothes, books, or records. But while spending, bear in mind that you can always get stuff when you are old, so it is wiser to spend on experiences. But, then again, do whatever you want!