What should I upgrade first in this Ryzen 5 and RTX 5060 PC?

Storage is the easiest immediate upgrade. Around 466 GB fills up quickly once you install Windows, applications, and several modern games, so adding a larger SSD would improve convenience even if it does not increase frame rates. After that, consider a matched 32 GB memory kit if you regularly multitask or play newer games. The integrated Radeon graphics reserving part of the system RAM is normal and is not itself a reason to upgrade.

Check what is actually limiting performance before buying anything. Use an in-game performance overlay: if the GPU is near 100% usage, you are graphics-limited; if one or two CPU cores are maxed while the GPU is well below full usage, the processor is the bottleneck. At 1080p, the CPU is more likely to matter, while higher settings can put more pressure on the 8 GB of VRAM.

The CPU is probably the most worthwhile upgrade, especially if you play competitive or CPU-heavy games. The Ryzen 5 PRO 5655G is an APU with less cache than comparable desktop Ryzen chips, so it can hold back the RTX 5060 at 1080p and high refresh rates. Your monitor is a 1080p high-refresh model, which makes a CPU upgrade more relevant than it would be at 1440p.

For this particular setup, I’d prioritize a larger SSD first if space is becoming a problem, then the CPU if your goal is higher and steadier FPS on that 1080p monitor. The RTX 5060 should be a reasonable match for the display, so replacing the graphics card does not seem like the first move unless you are targeting higher resolutions or demanding settings.