Landed your first job? Awesome! Here are four smart money moves you should make with your first real paycheck to kick-start your journey to financial independence.
So, you have finally landed your first real job? Woohoo! Now, you are probably just waiting for your first paycheck, right? Well, this is a big occasion and should be celebrated.
While it’s completely alright to splurge a little on the things you love, it’s equally important to inculcate the habit of savings from the very start. Because once you start living paycheck-to-paycheck, it becomes extremely hard to get away from this madness that can soon land you on the road to financial ruin.
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So, before you blow away all your hard-earned money on a fancy restaurant or buying yourself a fancy new wardrobe, here are four smart things to do with your money when you get your first job.
Take Stock Of Your Cash Flow
There is nothing worse than realising you spent half of your salary on online food ordering apps like Swiggy and Zomato, when you could have easily saved that money for a trip that you’ve been planning for months. This is where a simple and well-planned budget comes to the rescue.
A budget is nothing but a way to keep stock of your cash flow. Start by making a list of your monthly expenses that includes your everyday purchases like groceries, mobile phone bill, loan EMIs and other expenses. Once you have the list handy, work out a plan that allows you to cut down on unnecessary expenses and save more money than you do now. Once the plan is in place, make sure you stick to it and also keep reviewing it at the end of every month.
A lot of money management apps like the BankBazaar Mobile App can help you track your expenses easily. The app gives you a real-time update of your bank balance app and also sends you timely Credit Card bill payment reminders to help you plan your finances in advance.
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Set Well-Defined Goals
Once you get a hang of your cash flow, the next smart thing to do is make a list of all your short, mid and long-term financial goals. If you aren’t working toward any specific goals, you are likely to spend more money than you should.
A short-term goal is something that you would want to achieve in the near future, say, 6-12 months. This could be anything like planning a holiday, clearing your Credit Card debts etc. Similarly, jot down your mid-term and long-term goals that you want to achieve in another 5 and 10 years, respectively.
While setting your goals, make sure they are specific and well-defined. For example, if your goal is to buy a car in 5 years but you don’t specify the amount required, you will not have a definite target to work towards.
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Start Saving Early
Now that you have set your financial goals, start saving a portion of your income each month to achieve them. Even if it means starting with 3-5% of your income, and then steadily increasing it to 15-20%.
Depending upon your goal, income and risk-taking capacity, put these savings into good financial instruments like Mutual Funds, Fixed Deposit, Public Provident Fund (PPF) etc. to save tax and grow your wealth.
Don’t hesitate to take expert advice when it comes to choosing the right financial products. A good financial adviser can help you plan your finances and achieve your financial goals faster.
Get Adequate Insurance
Investing in an adequate insurance plan may seem like a bad idea now, but it’s really important to be prepared for unexpected emergencies like a medical exigency etc. A small trip to a hospital these days can easily cost you about Rs. 25,000 to Rs. 50,000. This is when a good Health Insurance comes in handy. In case you have dependents, getting a Life Insurance plan is also a must. This will make sure that your loved ones are financially secure if something were to happen to you in the future.
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There you go! If you have any questions on managing your first salary, leave them in the comments section below and we’ll be happy to help!
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