Regardless of what else you have going on in your life, the best days of any month are typically paydays. Unless you won the lottery and met Beyoncé in the same month — and honestly, hats off to you if you did — payday usually takes the crown.
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While some people might want to keep the good times going by splurging on that nifty little item that they’ve had their eye on for a while, you know better.
You’re financially savvy. You understand that the smartest way to use your paycheck — beyond ensuring your bills are paid — is to put that money into the service of growing more of it.
Before you’ve spent a single cent, here are five things to do that will make your paycheck last longer and work harder.
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1. Pay Yourself First
You know you need to put money into savings. But what you know and what you do can be two different things. Life gets in the way, and before you know it, you’ve left your money in your traditional checking account, making it all too easy for you to spend it without thinking.
There’s a way to fix this. Set up an automatic transfer from your direct deposit account to a high-yield savings account. With a high-yield savings account, your money earns interest over time, turning passive cash into future opportunity. Paying yourself first means saving becomes non-negotiable — not something you only do whenever you finally remember to do it.
2. Contribute to Your Retirement Plan
Whether your employer offers a 401(k) or a 403(b), you’d be wise to participate in your organization’s retirement plan, especially if they offer a match. That’s essentially free money you’d be leaving on the table otherwise.
Start by designating a percentage of each paycheck to be automatically deposited into your retirement account. If you can, go beyond that by opening a traditional or Roth IRA. Even if you don’t put a lot of money into these other accounts, every little bit helps – and it’s certainly better than nothing at all. Your future self will thank you.
3. Pad Your Emergency Fund
Here’s the thing about an emergency: You never know when it’s going to happen or how much it’s going to cost. That’s where your emergency fund comes in.
Aim to set aside a portion of every paycheck into a high-yield savings account earmarked solely for emergencies. Having a dedicated emergency fund means that when those emergencies arise, you don’t have to dip into the money you’d otherwise need for the rent or groceries. Financial experts generally recommend keeping three to six months’ worth of essential living expenses in this account.
4. Pay Down Your Debt
Debt isn’t just a monthly nuisance — it’s a drain on your future income. The faster you eliminate it, the more freedom you gain.
Allocate a portion of each paycheck to paying down debt. Whether you use the snowball method (tackling small balances first) or the avalanche method (focusing on high-interest debt), the key is consistency. Even a small, recurring payment can accelerate your progress and reduce how much you pay in interest overall.
5. Save for Special Occasions
Got a major appliance you need to replace? Or, on a happier note, a dream vacation you’re hoping to plan for? Special expenses don’t need to derail your finances. The trick is planning ahead.
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Set aside a little of each paycheck toward specific goals. Labeling your savings helps you stay intentional and prevents you from raiding your emergency fund or skimping on other financial priorities when the time comes.
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This article originally appeared on GOBankingRates.com: 5 Things Smart People Do With Their Paychecks Before Spending a Dime
