How To Make the Most of Every Paycheck

There’s no doubt that we all love payday. The feeling that your hard work, long weeks, and maybe extra overtime is being compensated and deposited into your account is a great thing. However, do you find yourself making purchases in preparation for payday, or spending it right when it comes? Are you truly budgeting your paycheck the way it should be?

It’s very tempting to buy yourself something nice, but resist the urge. Ask yourself what you would do with your paycheck if it was the last one you would get. We’re sure the urge to buy something nice would quickly diminish. Make the most out of the paycheck and all of the ones you receive moving forward. The CGS Team is sharing a few tips to help you do just that!

Budget Your Paycheck

If your paycheck is used to pay for certain bills, expenses and random spending, but you aren’t actually sure where it goes before your next check, you need to create a budget.  Your budget will help you best allocate your income to everything that needs to be covered.

Pay yourself first by contributing a reasonable amount to savings (if possible). Next, make sure all of your bills and living expenses are taken care of.  Lastly, pay off debts, and if there’s anything left over, give yourself some discretionary income to indulge in the little things that make you happy.

Adjust Your Tax Withholdings

A nice big refund at tax time is great, but wouldn’t that money be better suited for use throughout the year in your actual paycheck? When you find yourself getting a large refund each year, it means you are paying too much in taxes throughout the year. So what, I just get it all back?

Sure, you do. However, you are essentially loaning that money to the IRS throughout the year, interest-free. If the IRS loaned you money, they would certainly charge you interest! Increase your tax withholdings on your w-4 form for your employer.  Check out Go Banking Rate’s tax bracket cheat sheet for some great information.

Contribute to a 401k Plan

You should already be doing this, but if you aren’t contributing to your company’s 401k plan, then it’s certainly a requirement to making the most of your paycheck.  Often times, employers deduct your 401k plan contribution directly from your pay, so you never get to see or miss the money. The contribution is usually tax-free unless Roth options are available.

You may think you can’t afford to contribute to a 401k plan right now, but even as little as 1% will do you good. Trust us, that amount of money is not as significant as you think – and it’s going to something great. If your company doesn’t have a 401k plan, open an IRA at a financial institution.

Set Up Direct Deposit

Direct deposit is amazing. Not only do you not have to worry about going to the bank to cash or deposit your paycheck, you have the option of allocating where your income goes.  If you want a small amount deposited to your savings account, you can do that. You can have that money divided up into as many accounts as possible.

This is extremely handy for those of you who are very organized or may be saving for multiple things at once. Having your money already divided up makes it harder to spend it all.

Apply the Extras Accordingly

As we mentioned earlier, once all of your bills, living expenses, debts and small savings contributions are covered, you can give yourself some spending money.  However, depending on how much you have left over, there may be better ways of using that income.  Can you put more towards your debts?

Can you add a little more to savings? Why not do both and give yourself some spending money? If there is financial progress needing to be made, you certainly shouldn’t be spending all of the money on yourself.


Payday can feel even better when you know you are truly making the most of your money! Get yourself on a budget ASAP so you can see where you stand and where your money truly should be going.  Do you have a plan for your paycheck each payday? How do you make the most of your paychecks? Leave a comment below to share your suggestions with other CGS readers!

The CGS Team



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