Congratulations! You just made your first paycheck. It’s a great feeling, isn’t it? There’s a certain sense of accomplishment that comes along with having earned money yourself. Of course, once the giddiness fades a bit, you may find yourself left wondering what you should do with this money now that you have it. It can be a daunting task to face having to decide how to spend your own money when there are so many options now available to you that you may have never had before. Don’t worry, though, there are a few things that can make this task easier.
The first thing to do is to identify your needs. Needs are things you absolutely can’t do without. This may mean rent and utility bills if you are living on your own. If not, maybe you need to put gas in your car to get back and forth to work or set aside some money for lunches, etc. Once that is all taken care of, you can start looking at the things you want. It can be tempting to splurge, but you are going to want to hold back on that. Go ahead and get yourself something nice that you want. Go ahead and enjoy the freedom of having your own money for a bit, but don’t go overboard. Make sure you understand the difference between the things you need and the things that are really just nice to have. This may not be critical at the moment, but it is a very important distinction to be able to make later on.
You may have heard people say “pay yourself first”. That sound great, but what does it mean? This is a concept in personal finance that has to do with putting away money towards savings before spending all your money elsewhere. It may be difficult to think about savings at this juncture in your life, excited as you are about your first paycheck, but it’s important to start saving early. This is especially true if you have your eye on a large purchase like a new car or gaming console. Sure, you could go and spend your whole check on a new Playstation 3, but if you put away part of the cost now and then add to it with your next check, you’ll still get it within reasonable time and have money left over for other things you might want in the meantime.
Most importantly, try to avoid spending your whole check all at once. If you have living expenses such as rent, this may be unavoidable. Chances are, though, that most of the money you bring home at this point is going to be “free”. It can be very tempting to run out and buy every expensive new thing you see just because you can now. This isn’t a very wise move, though, as you’ll quickly find yourself broke again and wondering where all your money went. Moderation is the key here.
Aside from that, your paycheck is yours. You can honestly spend it however you like, but in the interest of a bright and cheerful future, you may want to consider putting some aside before you splurge. This may take a heavy dose of willpower, but it will be well worth it in the long run.