Getting your first job is a big milestone. You finally cross the student phase and start making it on your own.
While it takes you on a new high, the transition from a student to an employee is often challenging. A new phase can be exciting and overwhelming at the same time.
The young mind tends to get carried away with excessive spending, unable to cope with finances at the month-end…
You are not only finding yourself but also laying a solid foundation for the rest of your life. Managing work, learning the ropes around finances and new-found independence can be a task
We are here to back you on it. Here is a list of things you should take care of on your first job.
- Plan your finances.
Build a proper structure for your investments, expenses, and savings. Having a proper map in place helps you gain clarity and avoid overspending money. (especially where you’re accountable to no one for your finances!) Track your expenses in comparison with the plan so that you can work on any excess.
Also read: The 50:20:30 rule
- Invest. Invest. Invest.
Don’t just save money… invest t in an instrument that fetches you a good return. You can choose from a myriad of options – fixed deposits, mutual funds, equity, etc. Starting as soon as you start earning is a fantastic start to a relaxed future, and to build multiple sources for some passive income, or saving up for contingencies.
Also read: Investment tips
- Build up emergency cash
You might be in a secure place now with a certain amount in your bank every month. But you should also start saving up for emergencies.
You never know when a medical emergency or another kind of crisis (like the lockdown) strikes. It is always better to be ready with some investments in place which are relatively liquid.
Also read: Saving Schemes
- Expense Management
With full control over your finances, one can often get carried away with impulsive spending. Remember to spend only on things you need. Plan your bigger purchases so that you don’t feel a big hole in the pocket.
Also read: Importance of Financial Discipline
- Get your taxes right
Being an income-earner means being a taxpayer. Make sure you’re aware of your taxation slabs.
Make sure you are aware of the TDS deducted from your salary, and that you have all papers in place for the same. Get in touch with an advisor to understand how you can save taxes properly. Many investment avenues help in tax savings. Read up on them.
Also read: How taxation works in India
- Get Insurance for yourself
One of the first things you should do once you start earning is set up a life and health insurance for yourself.
Even if your family is not fully dependent on you, planning for any untoward events can turn out to be more useful than you think.
- Set Life Goals
With control over your finances, your first employment is the best time to start charting out a future for yourself – long term and short term. Plan your investments and expenses around these.
- Build Multiple Sources of Income
Your job does not have to be the only source of income. The lockdown has taught us well enough to never rely on a single source.
Building multiple sources of income doesn’t only help in securing your finances, but also helps in achieving your goals in the early stages of life. The idea is to not burden your job with all your income expectations and requirements.
Also read: Passive income for financial stability
- Invest in yourself
The key to consistent career growth is always being updated. Invest in yourself to keep learning new skills that help you at work, that develop your personality, and keep you sane. Education is one of the best options for investment… after all, YOU decide how much you want to make out of it!
- Think through your expenses
Don’t make a decision – be it for a new phone, a new dress, or a new house impulsively, or just because you see your peers doing it. Inculcate some discipline in your lifestyle to avoid erratic spending. It may seem like nothing in your youth, but these little savings come in handy in emergencies and retirement. Sound money management is essential for a sound bank balance.
- Make informed decisions
Big purchases, investments, and other financial decisions need thorough planning and research. Whether it is a health insurance policy or a lease – dive in only when you know the pool fully. This will help you avoid falling into financial traps or even paying excessively.
The last word
Creating a proper budget with good foresight and research is a skill every employee should have. Finances play a major role in your life and getting it straight from the very beginning can prove to be a big boon. Money should be a source of independence and security, not of stress.