When Scott Higgins got his first job at a pizza place at 15, his first paycheque was around $200. He remembers spending some of it almost immediately. 

“Even though it was a relatively small amount, I treated my friends to lunch at the school cafeteria later that day,” he says.

Now a student with a few more years of earning, spending, and saving behind him, Scott has a clearer view of what he wishes he’d known earlier. We asked him what he’s learned since that first $200 cheque, and asked Vancity and Aviso Wealth Advisor Brendan Gallagher what’s worth knowing when you start earning your own money. 

Five money lessons to learn from your first paycheque. 

1. Know the difference between what you earn and what you take home.

When Scott got his first paycheque, one of the first deductions he noticed was for Employment Insurance (EI), a federal program that provides temporary financial support if you’re unable to work due to job loss, illness or other qualifying life events.

This caught him off guard at 15. “I was surprised to see the EI deduction from my paycheque,” he says. “At that age, I didn’t really understand what it was for or why money was being deducted from my pay.”

Scott wasn’t completely in the dark. His math teacher had already taught the class how to calculate deductions as part of a financial-planning exercise, so he had an idea of what would come off his pay. 

Still, not everyone does. Brendan says deductions can catch people new to the workforce off guard. “Suddenly, what was expected to be $500 is noticeably smaller.” 

Start by understanding the difference between gross pay, which is everything you earned before deductions, and net pay, which is what actually lands in your account. Depending on your age and job, deductions on your pay stub may include: 

• Income tax: Your employer takes income tax off each paycheque and sends it to the government on your behalf. 

• Canada Pension Plan (CPP): Once you turn 18, you may start seeing CPP contributions deducted from your pay. Those contributions help provide income when you retire or if you become disabled. 

• Employment Insurance (EI): These premiums help fund benefits you may be eligible for if you lose your job through no fault of your own or need to take certain types of leave. 

• Other workplace deductions: Depending on where you work, you might also see deductions for a workplace pension, union dues, or an extended health plan. 

One form worth paying attention to when you start a new job is your TD1, or Personal Tax Credits Return. Your employer uses the information you provide on it to figure out how much income tax to take off each paycheque, so fill it out carefully rather than treating it like just another piece of new-hire paperwork. 

Brendan says it’s worth understanding what each deduction means, rather than only focusing on what came off your paycheque. Learning how income tax, CPP, and other deductions work “helps illustrate that money is going towards something, not just being taken away,” he says. 

2. Choose accounts that match how you use your money.

Scott’s second money lesson came from his savings account. For two years, he used his savings account for his everyday banking without realizing it only included 25 transactions. When he went over that limit, he was charged a fee. 

The problem, he realized, was that he hadn’t understood the difference between chequing and savings accounts. 

Generally, chequing accounts are built for everyday banking, while savings accounts are meant for money you’re putting aside. But the name on the account only tells you so much. Fees, transaction limits, and interest rates vary, and can affect whether an account is the right fit for how you plan to use it. 

“Understanding the difference and saving a dedicated percentage of my paycheque into my savings account would’ve given me stronger habits to build on,” he says. 

Before choosing where your paycheque should go, ask yourself: 

• What does your account cost? Look for monthly fees, transaction limits, ATM fees, and any other charges that could eat into your paycheque. 

• Are you eligible for a youth account? Some accounts, like Vancity’s Chequing Plus for youth, offer reduced or no monthly fees for youth and students under 25. You can also check Vancity’s student resources for current offers and more ways to make your money go further. 

• Do you have a direct deposit set up? Instead of waiting for a cheque to clear like Scott did, direct deposit sends your pay straight into your account. Your employer will usually ask for your banking information when you start, so make sure you know which account you want your pay to go into. 

• Is your savings earning interest? If you’re starting to build a balance you won’t need right away, consider keeping it somewhere that earns interest. Vancity’s Jumpstart High Interest Savings Account has no minimum balance, so you can start earning interest even if you’re only putting away a little from each paycheque. 

3. Watch for spending habits that grow with your income.

Getting a regular paycheque can make it easier to spend more without really noticing. Scott learned that one firsthand when he started eating out every day after getting his first job. 

“I remember my parents looking through my bank statement and telling me that I’d been spending way too much money on food,” he says. “I don’t think I was properly putting aside money and setting financial boundaries until six months later.” 

His advice now? “Be careful about lifestyle creep. Just because you earn more, it doesn’t mean that you can ​​say yes to everything.” 

After your first month or two of getting paid, look back at where your money actually went. Vancity’s free budget planner can help you compare what you planned to spend with what you actually spent, so you can spot habits that are starting to creep up. 

4. Make saving easier by giving your money a purpose.

For Scott, earning a regular paycheque has changed how far ahead he thinks about money. 

“Instead of thinking ahead for the next month, I contemplate whether I want to put this money towards a vacation, rainy day fund, building up a down payment for my house or perhaps even retirement,” he says. 

Brendan recommends “paying yourself first” by setting aside part of each paycheque before you start spending. Putting money into a separate goals-based savings account before paying your phone bill, buying new clothes, or getting concert tickets can help make sure you keep some of the money you worked hard for. 

How much you save depends on what you earn and what you need to pay for. If you’re looking for a place to start, the Financial Consumer Agency of Canada suggests transferring 5% to 10% of each paycheque into savings. Setting up an automatic transfer on payday can make saving feel more automatic. 

5. Ask for help before money feels overwhelming.

• A financial advisor who can help you understand your options, and 

• Someone who knows you well enough to offer a reality check. 

The first person should be a financial advisor. Scott says you don’t need to wait until you’re earning a certain amount or making a big financial decision to ask for help. “You don’t need to be requesting a loan or have a six-figure salary to have a conversation,” he says. 

If you’re not sure what you’d even ask, start with what’s happening in your life right now. Maybe you want help figuring out how much of each paycheque to save, choosing the right accounts, planning for tuition, or starting to invest. You can meet with a Vancity advisor to talk through your goals and what makes sense for you. 

That conversation can also help you think beyond your first few paycheques. As Brendan points out, your first job is building more than your bank balance. “Building life skills, technical skills, or simply gaining work experience is likely to end up paving your way to earning significantly more in the future,” he says. 

The second person is someone who knows you. Scott recommends talking to friends about how they budget, what they’re saving for, and what works for them. 

“Friends who know you well can give some of the best suggestions,” he says. “They can also give you a reality check if you’re being unrealistic in a way that feels accountable.” 

Recently, Scott asked a friend how much they were spending on subscriptions and discovered his own total was nearly twice as high. His friend suggested he start tracking his finances weekly. When he did, he found a few subscriptions he could cancel. 

“Talking about money is awkward, but talking to the right people took a huge burden off of my back,” he says. 

Quick checklist for your first paycheque.

Once you start earning your own money, use this checklist to stay organized: 

• Check every pay stub. Make sure the hours and pay rate match what you worked. Mistakes happen, and they’re easier to sort out when you catch them early. 

• Know when payday is. Weekly, biweekly, and twice-monthly pay schedules work differently. Add your paydays to your calendar so you know how long each paycheque needs to last. 

• Keep an eye out for your T4. Your employer will generally send it to you by the end of February. It shows how much you earned and how much was deducted in the previous year, and you’ll need it when you file your taxes. 

• File a tax return, even if you didn’t earn much. You could get some of the income tax deducted from your pay back, and filing can also help you access certain benefits and credits you’re eligible for. 

• Save your important paperwork. Save your employment agreement, pay stubs, T4, T2202, and other tax slips somewhere you can find  later. 

Frequently asked questions about your first paycheque.

Why is my first paycheque less than I had expected? 

Your gross pay is what you earn before deductions. Your net pay is what reaches your bank account after deductions. Depending on your age and job, deductions may include income tax, CPP, EI, a workplace pension, union dues, or an extended health plan. 

How much of my first paycheque should I save? 

There’s no single amount that works for everyone. The Financial Consumer Agency of Canada suggests starting with 5% to 10% of each paycheque if you can. What matters most is choosing an amount that works with your income and expenses, then building the habit of saving regularly. 

Should my paycheque go into chequing or savings? 

Your paycheque will typically be deposited into a chequing account, which you can use for everyday spending and bills. Money you don’t plan to spend right away can go into a savings account, where it may earn interest. Consider setting up an automatic transfer on payday to move money into savings before you spend it. 

Do I need to file taxes if I’m a student with a part-time job? 

It can be worth filing a tax return even if you didn’t earn much. You may be entitled to a refund if too much income tax was deducted from your pay, and filing can help you access benefits and credits you’re eligible for. 

What should I do with my first paycheque? 

Start by checking your pay stub and understanding any deductions. From there, decide how much you need for everyday expenses, put some money toward a savings goal if you can, and leave yourself some room to enjoy what you earned. 

Have questions about your first paycheque or what to do with it? You can book a time with a Vancity advisor, in person or virtually.  

Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc. Unless otherwise stated, mutual funds, other securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. The information contained in this article is from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is not intended to be investment, tax or other advice and should not be relied on without seeking the guidance of a professional to ensure your circumstances are properly considered. Please see our Terms of Use.