Understanding Your First Paycheck and Adult Expenses

By Kaitlin Hurtado on June 28, 2022

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College students are bound to experience many of their “firsts” in college, from their first apartment to their first job. Many college students will pick up at least one part-time job to cover all the expenses of being a college student — rent, tuition, textbooks, and funds to cover their social outings. For college students earning their first paychecks, it can be difficult to figure out how to spend and save whatever funds they are getting from their job. Not sure where to start now that you have gotten your first paycheck? Keep reading for tips on handling and understanding your first paycheck and adult expenses.

Photo: Pexels

Review your paystub for wages 

When you first get your paycheck, take some time to review the pay stub that comes with it. Make sure that the hours paid out match the number of hours worked for the given time period, and that the stated wage matches your current wage.

Your pay stub will also show your federal income tax withholding allowances. If you also have additional deductions, such as contributions to a 401(k) or health plan, you will want to review them on your pay stub as well. It can be disappointing to get your first paycheck and see that the amount that you are actually getting in your account is much lower than you expected. Reviewing your paystub to see how every deduction affects your total pay can help you understand your take-home pay better.

Budget around your paycheck

Every college student is going to have a different budget for their lifestyle. Some college students are lucky enough to get scholarships that cover the cost of tuition with some leftovers to cushion their budget every semester, while others will have to pay out of their own pocket for every cost during their college years. In general, your expenses as a college-aged adult may consist of rent, groceries, transportation (gas, bus cards, rideshares), and costs associated with hanging out with friends.

Once you get your first paycheck and get a look at your expected income, it’s time to sit down and make a realistic budget. Consider the expenses that absolutely need to be covered every month and how much you are spending on them. These likely include rent, tuition, and gas/transportation. You should also consider expenses you expect to pay, but are bound to fluctuate month-to-month, including groceries, personal care, entertainment, and so on. These types of expenses are something you can work with, such as spending a little more on groceries with the intention to spend a lot less on ordering takeout or delivery.

Depending on your financial situation, you should also account for any student loans you may have taken out. If the loans you took out are currently charging interest on the balance, you may be more likely to consider making monthly student loan payments as part of your current budget.

Subtract your monthly expenses from your take-home pay to get an idea of your discretionary income. Depending on your situation, you may not have as much left to put into your saving as you would hope.

Save versus spend

Unfortunately, not everyone is in a situation where they could put a generous amount from their paychecks toward savings. Many college students find themselves barely working enough to cover their living costs, leaving them unable to build up their savings accounts as much as they would hope.

Once you budget, you can see how much money you have left over from the amount you will need to spend to cover your expenses. At first, you may consider this leftover amount as free spending money that can go for any purchases to treat yourself or to cover outings with your friends. However, you may want to use this money to add to your savings Be ready to compromise and find a balance that works for your lifestyle.

As a college student, maintaining a social life and finding ways to destress are essential to living a happy and healthy life during your college years. You may opt to choose to have your leftover amount on your paycheck go toward your monthly “free-spending” budget, and whatever amount is left over at the end of the month, goes directly into savings. Or, you can alternate plans every paycheck. For one paycheck, the leftover amount goes toward free spending, and for the next paycheck, the leftover amount goes directly into savings.

If you are committed to building up your savings, you can elect to choose a set amount of money to go straight from your paycheck and into your savings account every month. A proper savings account can be the last thing on your mind as a younger adult, but a savings account can be your savior in a tricky situation where you find yourself without a steady income or facing an unexpected expense.

Getting your first paycheck can be exciting and confusing. It’s completely okay to take a few paychecks to find the right balance for your life as a college student. Good luck!

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