First Job Out of College? 3 Things to Do With Your First Paycheck

Getting a job after graduating college is an exciting milestone, but your first official paycheck is really something to celebrate. Once that money is in your hands, or, most likely, hits your checking account, you may be tempted to spend that hard-earned cash on the things you longed for as a college student but couldn't afford, like new gadgets, a vacation, or even the option to ditch the instant noodles for dinner and treat yourself to takeout. But rather than blow your paycheck, here are a few key moves to make instead.

1. Set up a budget

When you accepted your job offer and the salary that came with it, you may have attempted to divide that number by 12 to see how much money you'd be getting on a monthly basis. But while calculating your gross pay is pretty easy, calculating your net pay -- your earnings after taxes -- is more difficult. Once you get your first paycheck, however, you'll see how much money you're left with after the IRS has collected its share, at which point you can attempt to set up a budget that helps you stay on top of your spending.

To create a budget, list your recurring monthly expenses -- that's everything from rent to food to transportation to loans you're on the hook for. You should also factor in once-a-year expenses, if you happen to have any (like a roadside assistance plan that charges an annual membership fee). From there, you can compare your take-home pay to your bills and see how much money you have left over for savings and other goals. And if you're not happy with that number, you'll know to cut back on discretionary spending to get to where you need to be, whether that means downgrading your cable plan or canceling one of your streaming services.

2. Stick a portion of it in the bank

Let's be clear: Saving money isn't something you should just be doing with your first paycheck; it's something you should do with every paycheck. Now when you're looking at your first lump sum of cash, it's hard to get on board with the idea of sticking some of it into a savings account, but if you neglect to do so the first time around, you might fall into a pattern where you continuously make excuses and let your savings fall by the wayside.

If you're without an emergency fund, then your first priority should be to amass at least three months' worth of living expenses in the bank. Once your emergency fund is complete, you can start focusing on other goals, like retirement. The key, however, is to get in the habit of saving right away.

3. Send some of it into your company's 401(k)

If you're starting your first job out of college, retirement is many decades away. But that doesn't mean you shouldn't start saving for your golden years as early as possible. Doing so will only give your money more time to grow, which is certainly not a bad thing.

If you're doing well on emergency savings, sign up to have a chunk of your first paycheck land in your company's 401(k). On a long-term basis, you should ideally be socking away 15% or more of your earnings, but if that's not possible right away, save a smaller amount -- ideally, enough to snag whatever match your employer is willing to give you.

If your employer doesn't offer a 401(k), you can always open an IRA and house your retirement savings there. And in some cases you can even automate the process as you would for a 401(k).

The smarter you are with your first paycheck, the happier you'll be in the long run. Make these moves on your first payday -- and then give yourself a pat on the back for surviving your first few weeks on the job.