Getting your first paycheck can be a truly exciting experience. Your confidence soars as all of your hard work finally comes to fruition. But without an intentional plan for how you would like to use your hard-earned money, it is common to feel like it has disappeared far too quickly.
There are a wide variety of ways to spend a paycheck; whether that is on obligations like housing, food, and transportation or just enjoying the finer things in life. Having so many choices can make it difficult to decide! While everyone’s situation and needs are unique, here are five important considerations for figuring out the best way to spend your first paycheck:
According to a study reported on by CNBC in 2017, 46% of Millennials had $0 in their savings accounts. This is a vulnerable position. Something as small as a flat tire on the road or falling ill can put you in dire straits if you don’t have any money available to take care of yourself. These kinds of events happen frequently to the average person. It’s worthwhile to prepare in advance by setting some money aside. The consequences of not having funds available for an emergency is often accumulating debt or going without. Neither of which are desired options.
- Pay your debts.
For better or worse, debt is a major aspect of American life. Go Banking Rates did a survey of millennials aged 18 to 24 and discovered the average credit card debt amount is $709.79. But, that’s not the whole story. Student Loan Hero reported the average student loan debt for the Class of 2016 hovers around $37,172. Yikes! If you’re one of the millions of Americans dealing with debt, plan to use at least part of your paycheck to make payments. Once you clear out your debt and you have sufficient savings, you’ll be in great position to invest more aggressively and prepare for your retirement.
In an article by Business Insider, Warren Buffett shares that he spent the money he earned at 11 years old from his paper route to buy his very first stock. Not all of us began work at that tender age but whatever your age, it is a great time to start investing. There are many different ways to do it and from Warren Buffett’s story you can tell that it doesn’t take a lot to get started. Employers that offer you a 401K or other work-sponsored retirement plans tend to be a great option for many people to get started. Especially when you’re able to set up automatic contributions. Whatever you decide to do, know that the sooner you start investing, the more time your money has to grow.
- Have some fun!
What good is earning money if you can’t have any fun with it? It’s very common to get caught up in making a living than creating a life worth living. Movies with friends, going to amusement parks, and traveling are all great ways to spend your money, especially if done responsibly. If you’ve saved, paid what you owe and planned for the future, you most certainly deserve to enjoy the rewards of your hard work. Remember, saving doesn’t just have to be for emergencies; setting money aside from your paychecks for a fun trip is a good way to make saving a lifestyle choice!
- Give back.
Sharing is caring! Donating to your favorite causes and organizations is a great way to support the things that matter most to you. It’s about the spirit with which you give, not necessarily the amount. If there are community projects or social issues close to your heart, consider reaching out to learn about the different ways you can support to their mission.
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