If you're like 75% of U.S. employees, you probably signed up to get paid via direct deposit, which would be the smart, convenient thing to do. But just because your money is going directly to your bank account doesn't mean you can't access your paystub. Quite the contrary: Your employer should either give you a hard copy of your paystub or offer you online access to it.
Once you get your hands on it, here's what you need to do.
1. Be aware of your take-home pay
There's a difference between your gross pay and your net pay, and by the time you get your first paycheck, you'll have learned the difference -- though possibly the hard way. Once you witness the gap between your gross pay and the amount you get to take home, you may be in for a tough reality check. That's why you need to learn how much of your paycheck goes toward taxes and benefits and decide whether you need to adjust your withholdings and/or your budget in order to cover your living expenses.
Note that the amount you're taxed on your paycheck isn't necessarily the amount you're obligated to pay. Depending on your circumstances and the number of allowances you claimed when you filled out your W-4, you may be getting overtaxed or undertaxed on your earnings. When you get your first paycheck, see how much is being withheld in federal, state, and local taxes. If the amount seems high, you have the option of checking your withholdings to make sure you didn't claim too few allowances or finding ways to lower your overall tax burden. You may, for example, consider allocating pre-tax dollars toward a medical flex spending account, commuting costs, or, if applicable, qualified child care fees. And you should definitely put money into a tax-advantaged retirement account like a 401(k) plan.
2. Find a way to ramp up your savings
Like it or not, you should be saving a percentage of your earnings from the moment you bank your first paycheck. Once you see how much money you're bringing in, calculate the amount you can afford to allocate to a savings account and set up an automatic withdrawal via your bank. Your initial savings priority should be funding your emergency account, which should hold enough to carry you for three to nine months without an income. At the same time, start putting money into a 401(k) plan, and if your employer offers matching dollars, save at least enough to get the full match; otherwise you're giving up free money. If your employer doesn't offer a 401(k), or if the 401(k) doesn't suit your needs, then you can opt for an individual retirement account (IRA) instead.
3. Understand how much your benefits are costing you
Some companies offer generous benefits to their employees. Others, not so much. When you get your paycheck, see how much your benefits, such as health and life insurance, are costing you and do some research to determine whether there's a cheaper option available. You may, for example, find a less expensive life insurance policy on the open market than the one your employer offers.
Now when it comes to health insurance, you're less likely to find a lower-cost plan on the open market because you'll be solely responsible for paying your premiums. But depending on how much your health benefits are costing you, it could make sense to downgrade to a lower-cost plan if your employer offers multiple options.
Also, while you may not need a huge life insurance policy if you're on the younger side and are first starting out in your career, some experts agree that there's no such thing as being too young or too poor to have some sort of coverage in place. The key, however, is to make sure you're not overspending. If you're 22 years old with no dependents, for example, you probably don't need a $500,000 policy, and when you buy coverage through your employer, you may be locked into specific, preset amounts.
4. Talk to a financial advisor
Think financial advisors are only for the wealthy? Think again. Though you may only be working with an entry-level salary, now is the perfect time to meet with someone who can help you get on the right track early in your career. Even if your initial earnings aren't much to brag about, an advisor can help you invest that money wisely so that it serves you well in the long run.
Let's say you're starting your career at a salary of $40,000 and bring home roughly $2,500 per month after taxes. A financial advisor can help you create a budget to maximize your savings. Now let's assume you limit your monthly living expenses to $2,000 and have $500 per month to invest. If you know little about investing, you may be inclined to stick all that money in the bank, in which case you'll most likely earn less than $60 in interest for the first year. But if you were to work with an advisor and invest that money, you might triple or quadruple that $60 return in your first year alone.
If you continued saving $6,000 per year for the next 10 years but stuck to a basic savings account paying 1% or less, you'd wind up with roughly $62,500 after a decade of saving. By contrast, if an advisor helped you generate a reasonable 8% annual return, then you could grow that money to almost $84,000 over the course of a decade instead. The earlier you start, the better.
One last thing you'll want to do when you get your first paycheck is treat yourself to a little something special, be it dinner at your favorite restaurant or an electronic device you've been coveting. After all, no matter how much you earn or what you do, you deserve a modest reward for surviving your first week or so as a productive member of the workforce.