How to celebrate with your first paycheck without spending it all


Posted at Feb 10 2014 12:50 PM | Updated as of Feb 11 2014 10:24 PM

MANILA, Philippines - One of the most exhilarating experiences in the world is getting your first ever paycheck.

It gives you a great feeling of achievement, concretely acknowledges the work you have done, and serves as a ticket to independence. If you’re coming straight from university, it might be the biggest sum you have ever received, and knowing that you have earned it through your own hard work gives you a feeling of fulfillment that is hard to match.

Your first thought would probably be to celebrate. You might also find yourself heading for the store to buy yourself that special item that you have always wanted. You’re probably wondering how much you can splurge.

Before you begin to spend your paycheck away, here are five points you may wish you consider.

Learn the ABCs of your paycheck.

Since this is your first time to get it, take time to check out and understand all the items listed in it. Understand how the numbers were arrived at—for instance, your basic pay may be based on a daily rate computed by following a certain formula. Look at other payments such as allowances and benefits that have been monetized.

Pay close attention to the deductions as well. Typical deductions would include income taxes withheld at source, mandatory payments to the Social Security System (or the Government Service Insurance System for government employees), PAG-IBIG and Philhealth. Know when these deductions are made and how each of the numbers were arrived at to ensure that they are correct.

Also know what large deductions are possibly coming your way—for instance, tax adjustments made toward the end of the year may mean a big deduction that would affect your cash flow. Don’t be afraid to ask questions. Familiarity with your paycheck would enable you to spot errors that may arise in the future.

Start a journal of your expenses.

Write down your expenses on a daily and monthly basis. Think of how much you spend for food, transportation, personal care, entertainment, lodging, etc. This number would serve as a basis that will help you in planning a budget. This is a habit you should cultivate throughout your life, as these journals could give you an idea of how you can better plan your finances.

Draw up a budget, and stick to it!

Based on your journal of expenses, create a budget plan that you can stick to in the days ahead. Put your expenses into different categories: food, transportation, utilities, personal care, entertainment, savings. Make this budget realistic. Set spending limits for the different categories of expenses, and set aside an amount for savings as well. This will help you to avoid overspending in the future.

Choose a bank partner and open an account.

If you company hasn’t done it for you, it is time to open a bank account. Find a bank that is accessible to you, preferably near your home or place of work. Choose a reputable bank to ensure the safety of your money. Compare services across banks. You would want one that has a wide branch network (just in case you want to do interbank transactions); offers varied services for retail customers, including online banking facilities; and provides good service.

Cover the basics.

Although you may think that you are just starting out, it is never too early to think of the basics that you need to have to secure your financial future—insurance coverage, pension, and health coverage. If you are lucky, these may be provided as benefits by your company. Even if your company does, it may be wise to begin taking one of your own to augment what your company provides. This will ensure that you have your coverage even after you resign from your company. Insurance, for instance, is much cheaper when you are younger. Retirement or pension funds grow over time, and a longer time horizon would allow your money to earn more.

And yes, even after checking your list for these five things, there will still be room (and money) left for a good celebration. Your first paycheck comes just once in your lifetime. Treat yourself or your loved ones to something you will enjoy, guided by your knowledge of your spending limits and earning capacity.


Grow Your Money is an editorial partnership between and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.