If you’re a young graduate who just got employed, receiving your first salary can be really exciting. Since this is your first time getting paid for your hard work, surely, you’ll have a few things in mind that you’d like to spend on.
But, did you know that many have regretted overspending their salary due to bad financial planning? Let us share with you some tips on how you can plan to better spend your first pay cheque.
Plan your expenditures
As soon as you receive your salary, plan your expenditures carefully. First, check and pay off all your your bills and loans before spending on anything else. Make sure you prioritise your ‘needs’ before your ‘wants’.
Start a savings account
Make it a habit to save. Try to put aside 10% of your salary for your savings. You can start an alternative savings account – other than the one you use on the daily basis – to avoid misusing it. There are many advantages of saving like accumulating interest, paying for your holidays and more. Also, in the event of any future unforeseen emergencies, you can use your savings to fund it.
Purchase insurance for protection
You shouldn’t ignore the importance of having insurance. It protects you against any accidents and unfortunate events. There are many types of insurance in the market like life, health, education and general insurance. Shop for an insurance package that suits your needs and budget from the many insurance companies in the market.
Plan for retirement
It is never too early to plan for retirement. You can start by investing in a retirement fund. A great example of an institution providing financial management for your retirement is the Employee’s Provident Fund (EPF) or the Private Retirement Scheme (PRS). Try to avoid withdrawing from your fund for any reason like buying a house or renovating it. You won’t want your fund to run dry before you retire.
Purchase a low-cost house
It is really impossible for a young graduate who just started working to own a home? Of course not! With a little planning, you definitely can. With just a few months into your job, you’ll be able to own a low-cost house. But, if you think the monthly repayment is too high, you can always rent out your house or a room. With the monthly rental you receive, you can afford the home monthly repayment and also get some side income for yourself.
Spend on moderately on yourself
When you receive your first salary, you’ll surely want to celebrate and spend it on yourself. It isn’t wrong to do so, but try to spend moderately. Don’t be influenced by the latest trends and fashion. You don’t need branded goods, gadgets or smartphones that is well over your budget. You don’t want to overspend and leave nothing for your savings. Try to spend within your means. There are many ways to celebrate without blowing your budget.