what should ibe the first thing i upgrade on my bike?
I just happen to be a self serviced mechanic who is used to the budget limited upgrading process.

I start assembling bikes from the frame up, so the first thing I get is anything that is able to roll and is pedalable.

From that point, use it as much as you can, (this is where you are now) and start evaluating with parts are you pushing harder toward its limits. While you ride, pay particular attention to how often you bottom the fork, how often you find yourself out of gears (either high or low), if you make too much effort while braking or whether flexing of some component is too annoying.

Before deciding to replace some part of your bike, be sure that it can not be serviced or adjusted. For example some forks can improve performance changing internal springs or elastomers, changing the oil grade or moving spacers to change travel. All of these are operations better performed together with deep maintenance. Also, be sure to readjust anything that is adjustable, (preload, rebound or others) as your body changes (get heavier/lighter, stronger) and your technique evolves.

Also be sure to re true your rims and check if all spokes are in good condition. Check adjustment and condition of bottom bracket, headset and pedal bearings and cleats (if applicable). Make sure brake pads are also in good condition. Check rotors and cables or hoses as needed.

When you perform the appropriate maintenance you can optimize your bike's performance, so you can better decide where to invest. Also you eliminate the possibility that something that can be solved with a simple, inexpensive exchange makes you spend your money on a less necessary or less wanted feature. (Good brakes are an example: my LBS is crying to me to upgrade to hydraulic disc brakes, but I'm just as happy with mechanical brakes in one bike, and v-brakes in another, I just have to clean the pads and rotors/rims periodically, with the savings I bought a fork, which I really needed and really enjoy.)

Personally I think the fork is one component that can change the bike handling radically, any other component will have a more modest impact in riding (Assuming they all are performing correctly). A good fork will enable you to descend faster, with more precision and confidence, but also won't steal your energy when pumping up a hill.

Any of the major bearings (hubs and the bottom bracket) is also a good upgrade. If yours are really cheap or are really beaten up, you can get a significant improvement. Basically you'll be faster while exerting the same force or you'll end up less tired at the end of a ride. However, if you are already on mid-range hubs or BB, and yours can be serviced, just do so. Upgrading will be expensive but not as significative (you won't feel that much of an improvement).

Drivetrain is a delicate topic. It can be a huge advantage, but it can also be very expensive. Going from a 8 speed setup to a 9 speed one is very expensive as the price gap is significative and you usually have to change several components at a time. Be sure first if rear derailleur can be serviced, for example, can you buy new pulleys for it at a reasonable price? Before deciding to upgrade, be sure your problem can not be solved by a similar  component. For example you need more climbing gears and have an 11-28 8 speed cassette, chances are you can get away with a 11-32 8 speed cassette, but your LBS may say you "have" to upgrade to 9 spd.

My final advice regarding upgrades on a budget is: since you have a rideable bike, your upgrade is not an emergency, so, plan to upgrade something, make a list of brands/models that fit your application and if none of them is a bargain, wait for one that is (I'm not saying you wait forever). Usually you can get really good prices during inventory clearances, or you can buy OEM parts (they were part of a complete bike, but were removed in the store because the client upgraded with the purchase, or the store decided to sell the bike by components). With OEM components you get lower price because you get an item that may have installation marks and almost sure you won't get packaging or manuals.

While you wait, save money to increase your budget. And also, talk to friends and acquaintances, you may get lucky (A friend once just gave me a fork, it was dented and the LBS advised him to replace it).