What to Do With Your First Paycheck
- Check that your withholding looks correct on your pay stub (W-4 was set up properly)
- Enroll in your employer 401(k) immediately — do not wait until the next enrollment period
- Contribute at least enough to get the full employer match — this is free money
- Open a high-yield savings account if you do not have one
- Set up an automatic transfer of at least 10% of take-home to savings on payday
- Pay all recurring bills on auto-pay from your checking account
- List all monthly expenses and verify you have income coverage for all of them
The First-Job Budget Template
First-job budget template — target percentages and dollar amounts
| Category | Recommended % of Take-Home | On $3,200/month Take-Home |
|---|---|---|
| Housing (rent + utilities) | 25-30% | $800-$960 |
| Food (groceries + dining) | 12-15% | $384-$480 |
| Transportation | 10-15% | $320-$480 |
| Health and personal care | 5-8% | $160-$256 |
| Entertainment and social | 5-8% | $160-$256 |
| Emergency fund savings | 5-10% | $160-$320 |
| Retirement (401k / IRA) | 5-10% | $160-$320 |
| Student loan payments | 5-10% | $160-$320 (if applicable) |
| Buffer / miscellaneous | 3-5% | $96-$160 |
Investing $300/month starting at age 22 at 7% annual return reaches approximately $1,000,000 by age 65. Starting the same $300/month at age 32 reaches only $479,000. Those 10 early years contribute $520,000 in additional wealth through compounding — even though only $36,000 more was actually invested ($300 x 12 x 10).
The Accounts to Open Immediately
Beyond your workplace 401(k), open these accounts in the first month of employment: a high-yield savings account for emergency fund (HYSA at 4.5%+ APY), and a Roth IRA if your income is under the phase-out threshold ($150,000 single in 2025). The Roth IRA is particularly valuable at the start of a career when you are in the lowest tax brackets — tax-free growth and withdrawals in retirement are most valuable when funded with low-bracket dollars.
Set Up Your First-Job Budget
Enter your new take-home salary to see a recommended budget allocation from day one of your career.