5 Things to do immediately after you get paid

Personal finance is not something that is taught in schools so many people don’t know some of the basics things to do immediately after you get paid. We live in a culture where it’s all about bills, debt and more bills so much that in most instances we don’t even have enough money for ourselves. When I was paying off debt, it felt like all I did was work, pay my bills which included my debt but hardly had enough to actually enjoy once all the bills had gone through. It is important to find a way to break the cycle and live a more fulfilled life that is not consumed by financial stress.

We all have different priorities in life and this post is not meant to demean your priorities because we are all different and have different responsibilities. But, I think, these 5 things to do immediately after you get paid are very important especially in our current day and age where we are more consumer focused. The tips I share in this post are those that I personally follow every single month, you don’t have to follow word for word but have an idea of some other ways to manage your money. Remember, personal finance is personal so bare that in mind as I share 5 things to do immediately after you get paid.

Disclaimer: I am not a financial advisor, all opinions shared are my own.

5 Things to do Immediately after you get Paid

When I moved out of my parents house, I started a budget to keep track of my spending because I knew I had low income but always trying to live a larger than life lifestyle. At university, it is a time of discovering, learning about yourself and about managing money, friendships and relationships whilst at the same time gaining an educational that will hopefully set you up on a career path that you will love. I am fortunate to have done a degree that matches with what I wanted to do in life ‘life sciences’.

I will not say that I was good at managing my finances when I was at university far from it even though I budgeted every single month. But what I found is that my budget was depressing because my income did not much my ‘needs and wants’. This led to me relying on my credit card to supplement my lifestyle, this wasn’t totally a bad thing if I had income to pay off the card every month but no, I held the balance for many months. This lead to poor credit score because I missed credit card repayments most months and led to me diving into payday loans which also held me under the debt thumb for too long.

The 5 things to do immediately after you get paid will help you regardless of your situation, whether you are paying off debt or trying to save for a deposit or another financial goal.

(1) Employer Match

If you are in the UK (US as well), most employers offer a match on your savings for your pension. I get paid monthly, as part of my agreement with my company, I pay into a private pension with my employer and per the government mandate, my employer offers me a match. This simply means, if I contribute 4% of my salary, my employer matches that 4% and puts in a 4% making my pension contribution 8%, essentially free money for my future. When you are young (20s) you feel like thinking about your pension in that age bracket is not essential but far from it, the earlier you start the better/fatter your pension pot will be. So, the first thing I do before I even see my money is do an employer match to wards my pension.

(2) Pay Yourself First (PYF)

Pay yourself first is a concept I learned about many years ago and it essential means you send money either to your savings, checking out or an investment of your choosing. Personally, my PYF consists of sending money to my savings for my financial goal and towards my investments for the future. I think it is so important to have both savings and investments, sure inflation is a silent killer for your savings account but for emergencies, cash is king. So, the second thing your should do is pay yourself first and the next point explains who you workout how much to pay yourself.

(3) Budget

Most people don’t like to budget because they think budgets are restrictive, I have said this before and I shall continue until everyone understands. Budgets are only as restrictive as you make them to be and there is no two ways about it, it’s that simple. When you know how much money you earn, how much your bills cost you, you can then work out how much you can allocate towards savings and enjoyment. I follow a couple budgeting systems; ‘50-30-20 money rule‘ and ‘zero-based budgeting‘. The former requires your to sending 50% of your income to needs (housing, food, bills), 30% to wants (Netflix, cinema, holiday) and 20% towards savings or debt (if you have any). The the latter just requires you to ensure you balance your books, your income minus your expenditures should equate to zero and this doesn’t mean your bank account has to be at zero, rather the money in the bank is assigned a specific job (rent/mortgage, groceries, savings, investment etc).

(4) Spend on you

Just because I have a budget doesn’t mean I can’t spend money on things that I want and love, it is because I have a budget that allows me to know how much I can spend on frivolous things without feeling guilty. It is important to allocate money to spend on your, some people use the pay yourself first as a time to spend on themselves and that’s fine but for me, I feel during that time, I am focusing on important financial goals. Spending on me could be anything I want like clothing shopping, socialisation, holidays and many more. Make sure your budget has a slot for spending money on you even if it’s just £10/$10.

(5) Give (or tithe) back

It does not matter if you are a person or faith or not, giving should be part of everyone’s budget because giving back to your community, to your church or to your family is rewarding. I am not saying if you don’t have you should give, I am saying, give what you can, some give 10% of their income, others give their time and others give the spare change that they have. It’s all about where it is coming from, it’s not giving for selfish reasons but giving from your heart when its your time, food or money. It is after all what makes the world go round, our kindness to one another.

Of these 5 things to do immediately after you get paid, which are you already doing or want to do more of moving forward? What other things do you do other than what’s mentioned above?