First Pay: Here’s how to manage your money from day one

Money has a way of disappearing if you don’t plan smartly

Create a budget

Your first paycheck can feel like an endless supply of cash, but it’ll go faster than you think if you don’t plan smartly. Start by verifying your exact salary and all the additions and deductions.

Then sit down and figure out how much you’ll spend on needs (groceries, commuting costs) vs. wants (concert tickets, an upgraded phone) each month. Tracking cash flow means you won’t find yourself in a situation where you’ve blown two weeks’ pay on dinners out and can’t pay your electric bill.

Start paying back your loans.

If you’re coming out of school with loans, and chances are good you are (the average class of 2018 grad had nearly $30,000 in student loans), you’re most likely going to have to start paying them back six months after graduation, when the “grace period” ends. The good news is that there are more options than ever before to help you manage and pay back your student loan debt.

If you have other debts, start chipping away at them too. The sooner you become debt-free, the happier you would be.

Start saving immediately

When you start your job, you might have access to an employer-sponsored retirement account, such as RESP To start, set aside as much of your paycheck as you can manage—at least as much as you need to max out any employer match, if one is offered.

If you have other savings goals (you want to buy a car; you’d like to go to Europe next year, or saving for down payment), decide how much you need to set aside each month for those as well, and plan to save that money as soon as you’re paid each month.

Start an emergency fund

First paycheck

Being out in the “real world” can come with surprises, from huge car repair bills to medical emergencies. And many of us aren’t ready for these budget crushers. In fact, surveys have shown that over 70% of millennials have less than $500 in an emergency fund.

Aim to have at least one to two months of living expenses in a savings account for emergencies. That way, a surprise expense won’t force you to whip out your credit card or derail your other financial plans. Start small: Set up automatic transfers from your checking account to an interest-earning savings account on paydays, in whatever amount you can afford, and you can build up those savings $20 or $50 at a time.

Build your credit history

Establishing a good credit score and a strong credit history can help you with all kinds of things, from renting an apartment to snagging a better rate on refinancing a student loan (and someday, a mortgage!).

About 35% of your credit score comes from your payment history, so you can improve your credit by developing some solid habits. Start by making on-time payments every month on your credit card, and don’t miss payments.

Pay yourself first

You’re just getting started now, but someday soon, you’ll be getting a promotion, a raise, or a bonus (or all of the above!) to reward your hard work. Accelerate your savings with this smart advice: you should always save at least 50% of every raise and 50% of every bonus. That way your savings will take a big jump, but you’ll still have some extra ‘fun money.