What Teens Should Know About Their First Paycheck
Getting your first job is an exciting step toward financial independence. There are several steps you can take to set yourself up for financial success after starting your first job. Let’s go over some of those things.
Understand Your Paycheck
You may think that because you work x number of hours and get paid x amount per hour, multiplying those amounts will give you your paycheck amount. However, several taxes are deducted from each paycheck, making your paycheck smaller than you might expect. These may include federal income tax, state and local taxes, and Social Security and Medicare.
Open a Checking and Savings Account
If you don’t already have a checking or savings account, you should open one. You can have your paycheck deposited into your checking account and then transfer money to your savings accounts. It could be wise to have your spending money come out of your checking account and only touch the money in your savings account when absolutely necessary. Starting your savings young can make a big difference in years to come.
Here at Guardian, we offer several checking accounts, including student checking. If you are currently a student, you can earn cash rewards by having qualifying GPAs. We also have several savings accounts to choose from.
Set Up Direct Deposit
Before your first day, you’ll want to set up direct deposit. You’ll need to give your employer your financial institution’s routing number and your account number. If you’ve already started working and haven’t set up direct deposit, you can talk to your employer, and they can help you set it up.
Saving Your Hard-Earned Money
You might want to spend all your hard-earned money right away, but saving it is actually the smarter decision. There are several things you can do to make saving feel easier.
First, you can set up automatic transfers from your checking account to your savings account. This will help you stay on track and give you a portion of your paycheck for spending, rather than the entire paycheck. You’ll be able to watch your savings grow without having to put much thought into it.
Second, you should come up with a way that works for you to track your spending. Maybe you have a spreadsheet where you write down how much you are spending and saving each month. Every person is different and likes to budget their way. Download our budgeting guide to learn how you can start your budget and stay on track.
Finally, try learning the difference between wants and needs. If you see something you want to buy, sleep on it to see if you feel like you need it. It’s easy to buy things simply because you saw it on social media or saw someone else had it. Most of the time, we don’t need a lot of the items we want. Some examples of needs are food, hygiene products, and transportation. Examples of wants are trendy clothes and accessories, technology upgrades, trendy beauty and skincare products, and gaming gear.
Create Goals
It can be good to work toward a goal. If you know you want to go to college or have a goal to buy a new laptop for school, you can put your earned money into a savings account and have that goal in mind. Maybe you don’t have something you’re trying to save for and just have a goal amount to have in savings. Either way, it’s great to have a goal you want to reach.