Excited and nervous about your first job? Here are six handy financial tips for you that will help you ease the anxiety before you begin your career.
Are you excited and nervous about your first job in equal measure? That’s completely understandable. In fact, it is entirely normal to feel jittery in the lead up to your first day at work. To ease your anxiety, we’ve put together a few financial tips to prepare you for what will be the start of your career.
Ready to take the leap! Here we go!
Keep all your documents handy
The organisation that you plan to join will give you a list of documents that you need to keep handy on your first day at work. These documents generally include your educational certificates and government-recognised documents like PAN Card, Aadhaar Card and Passport.
If you don’t have any of these documents for whatever reason, it is extremely vital that you start applying for them as soon as possible. Currently, getting yourself an Aadhaar should be at the top of your list of priorities since the government has made it mandatory in order for every Indian citizen to file Income Tax Returns.
In fact, you will be required to link your Aadhaar to your bank account, your mobile number, PAN Card and a whole bunch of other documents and services. And with the government setting a deadline of December 31st 2017 for the linking of your Aadhaar to your bank account, you could lose access to your money if you fail to do so by then.
There’s no escaping big brother!
Additional Reading: Linking Your Bank Account With Aadhaar: What Happens If You Don’t?
Read and understand your offer letter and pay slip
While you will probably be on cloud 9 once you get your offer letter, there are some important things that you need to check before you accept the offer.
It’s quite common for freshers to only look at the full salary package and ignore the salary breakup altogether. And the few who do manage to look through the components of their salary usually fail to understand it completely.
So, you not only have to scrutinise your offer letter but also have to understand every little detail, irrespective of how thrilled you are about having landed a job.
Your annual CTC is the salary amount without any deductions. However, components like PF (Provident Fund) will be deducted from your salary and the amount after deduction will be your take home salary.
Most companies also have a section called special allowances, which include medical allowances, conveyance and communication allowances. If any of these components are a part of your salary, don’t forget to retain all medical bills, petrol bills, taxi bills and mobile bills.
If you have any doubts regarding your offer letter or salary breakup, never hesitate to ask the HR of the company. Also, salary negotiation is a real thing, so don’t miss out on that.
Additional Reading: What Are The Components Of A Salary Slip?
Don’t forget to check the tax slab that you fall under
All of this may sound quite new to you considering you’re about to start your first job, but there’s no denying that it is also extremely important. In that respect, you will also need to know the Income Tax slab you fall under.
Since it’s your first job, you are likely to fall under the income tax slab for individual taxpayers and HUF (less than 60 years old) (both men & women).
In all likelihood, the tax rates listed below will apply to you:
|Income up to Rs. 2,50,000||No Tax|
|Income from Rs. 2,50,000 – Rs. 5,00,000||10%|
|Income from Rs. 5,00,000 – Rs. 10,00,000||20%|
|Income more than Rs. 10,00,000||30%|
An additional surcharge and cess will be applicable as well. You can always discuss this with your employer to find out the tax that you need to pay.
Additional Reading: Income Tax Slabs For FY 2017-18
Learn more about insurance
These days, most companies offer Health Insurance policies. Make sure you provide details of your parents, spouse, and siblings so that they too are covered by the Insurance policy. If your company does not offer insurance, you can buy a policy that provides good benefits.
Don’t go for a policy based on its tax benefits only. Check the cover value and other benefits as well. A Term Insurance policy will work well for you, as it provides good cover at a reasonable price.
While Health Insurance and Life Insurance are important, don’t forget about accident Insurance. These policies are useful in case of a temporary or permanent disability that can lead to the loss of your job.
Additional Reading: Health Insurance Policy: How To Make The Right Choice
Enjoy your salary wisely
One of the biggest mistakes that most freshers commit is blowing up their salary as soon as it hits their account. However, they fail to realise how quickly spending becomes a monthly habit. This is exactly why you have to get into the habit of saving right from the beginning.
The best way to do so is by opening two accounts: one for saving and one for expenses. Never touch the money deposited in the account meant for the purpose of saving. By only utilising the funds in the account you’ve set aside for expenses, you will be able to stick to your budget without too much trouble.
Download an app which will help you track your expenses. While house rent and food are necessary expenses, you can certainly cut down on eating out and splurging on the weekends.
Additional Reading: How To Achieve Savings Goals
Build an emergency fund
While you may have insurance, it’s still important to build an emergency fund during the early years of your career. You never know how unpredictable life can be. What if you lose your job? Or your company shuts down? What if you meet with an accident and are unable to go to work and your insurance doesn’t provide any cover?
Regardless of the scenario, you can be sure that an emergency fund will help you bear the financial brunt during tough times like these. This is exactly why you need to start saving as soon as you start working. You can always put the money in a Savings Account with a high-interest rate or in a Fixed Deposit.
Additional Reading: An Ultra-Quick Way To Invest In A Fixed Deposit
Hopefully, your anxiety has subsided a fair bit now that you know what you need to do before you become a part of the machine.
If you want to check out some cool financial products that you can invest in, click on the link below.