What to do with your first paycheck: Smart money tips

Updated Sept. 5, 2025, at 9:28 a.m. CT

Getting your first paycheck is a big deal. It’s proof that you’re officially out in the working world—and that all your hard work is paying off (literally). But once the excitement wears off, many young adults wonder the same thing: What should I actually do with this money?

The truth is, your first paycheck can set the tone for how you manage money going forward. That’s why we’ve rounded up some practical, beginner-friendly steps to help you make the most of your hard-earned money.

Understand your paycheck

One of the first surprises about a paycheck is that the number you thought you were going to get is not what actually lands in your checking account.

That’s because:

• Taxes (federal, state and local) are taken out.
• Social Security and Medicare contributions are deducted.

Other withholdings (like health insurance or retirement contributions) may also reduce your take-home pay.

Create your budget

Budgeting isn’t about restriction—it’s about giving every dollar a job.

With your first paycheck, you’ll want to get in the habit of covering essentials, saving for the future and still leaving room for fun.

Here are a few approaches that might help:

• 50/30/20 rule: 50% for needs (rent, bills), 30% for wants (dining out, hobbies), 20% for savings or debt.
• Zero-sum budget: A budgeting approach that gives every dollar a job. See how it works here.
• Pay yourself first: Put money into savings as soon as you get paid, before spending on anything else.
• Budgeting tools: Use Dupaco’s Shine Online and Mobile Banking’s built-in budgeting tools for personalized tips to help you spend even smarter with your Dupaco accounts.

Not sure where to start? A free Dupaco Money Makeover could help you create a budget that works best for you, your money and goals.

Request your free Money Makeover >

Start saving (even a little)

Between rent, utilities, cell phone and student loan payments, it might feel like you don’t have much left. But setting aside even a small amount can make a big difference.

Saving the right amount is key, though. If you try to save more than your budget allows, you start dipping into your savings. Using multiple accounts, like Dupaco’s You-Name-It Savings accounts, can help you regularly save for the things and goals important to you.

Here are a few buckets worth saving for:

• Emergency fund: Aim to build a cushion for unexpected expenses, like car repairs or medical bills.
• Short-term savings: Want to travel, buy new furniture, or upgrade your laptop? Save gradually instead of reaching for a credit card.
• Long-term savings: Even $25 a paycheck into a savings or investment account helps you build good habits.

Everything you should know about emergency funds >

Look ahead to retirement (yes, already)

Retirement might feel decades away, but your future self will thank you for starting early. You have options:

• 401(k): If your employer offers one—especially with a match—sign up. That’s essentially free money!
• Roth IRA: If you don’t have access to a 401(k), or are ready to save even more, consider opening a Roth IRA. Contributions are made with after-tax dollars, and qualified withdrawals in retirement are tax-free.

Even if you can only put in a small percentage of your paycheck, the earlier you start, the more time your money has to grow.

Be smart about debt

Student loans, credit cards or a car payments can eat into your paycheck quickly. Whenever you take on debt, you’ll want to:

• Make at least the minimum payments to avoid fees.
• Pay extra on high-interest debt (like credit cards) when possible.
• Balance saving and paying off debt—don’t neglect one for the other.

Find out the best way to build your credit >

Practice before making a big purchase

Dreaming of a car or new apartment? Before you commit, “practice” the payment.

For example: If a car loan would be $300 per month, set aside $300 from your paycheck each month for six or so months.

• If you manage it comfortably, you’re ready.
• If not, you just saved $1,800 toward your down payment.

Avoid lifestyle creep

As your paychecks grow, it’s tempting to upgrade everything—apartment, car, clothes, eating out. A little is fine. But try not to let spending rise as fast as your income.

Stop lifestyle creep in its tracks with these tips >

Use trusted resources

Your first paycheck is more than a deposit—it’s the start of a new chapter in your financial journey. By budgeting wisely, saving early and avoiding common pitfalls, you’ll set yourself up for long-term success.

But managing money takes practice, and you don’t have to figure it out alone. Your credit union can help with tools for budgeting, savings accounts for different goals and guidance on things like student loans or credit building.