Here are three smart moves to make after receiving your first paycheck. You may have worked part time jobs starting in high school and continued working while in college or trade school. Now that you are graduated and have landed your first job that could be called a career, what should you do with the money? Here are three smart moves to make.

Save for retirement.

Does your new employer have a retirement savings plan? If so, sign up for it as soon as you’re eligible and contribute at least up to the match. Now would also be an excellent time to sign up for a Roth IRA and start contributing if you are eligible to do so.

The earlier you start building your retirement nest egg the more the power of compound interest will work in your favor. Start saving young and contribute as much as you are able to.

Pay off debt.

Do you have student loans from your education? Are you carrying any other debts? Now that you have a higher income you need to start attacking any debts that you may have.

Come up with a strategy to start accelerating the payback on your debts. Dave Ramsey has a popular debt repayment method called the Snowball method. That is a good place to start.

Staying saddled with debt will hold you back from saving for retirement and from living life.

Don’t raise your lifestyle to match your income.

Many people make the mistake of raising their standard of living as soon as they start receiving a larger paycheck. While some upgrades will be necessary as you venture out on your own and start building your life, you need to be mindful of what you are spending.

Don’t fall into the trap of buying a new car, all new furniture, and a new wardrobe right out of the gate. For most people doing so equates to taking on a lot of debt. They then become a slave to their paycheck and their employer and end up in a cycle of living paycheck to paycheck.

Do you really need a new car? Can you get by with the one you have or maybe find a quality used car? Same goes for furniture. You can furnish an entire house with used furniture for less than a fourth of what new would cost.

The point here is to keep expenses and debt as low as possible. It will be very difficult if not impossible to build wealth and pay down debt if you are stuck living paycheck to paycheck.

Wrapping up

What are three smart moves to make after receiving your first paycheck? Saving and investing, paying down debt, and living below your moves are some smart moves to make. You’ve finished schooling and landed a career. Congratulations. Now you can start your wealth building journey.

This article was written by Brian Lesko from All Things Finance and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.