This is How to spend your first salary if you want to be financially responsible

Considering South Africa’s unemployment crisis, finding your first job is a cause for celebration. More importantly, it provides an opportunity to plan your financial destiny from the start.

What you do with your first pay cheque can provide you with an opportunity to set yourself up for life, a life in which you can meet current and future financial commitments, feel comfortable with your financial future, and make decisions that allow you to enjoy life.

It will also assist you in realising your aspirations, according to Tshiamo Molanda, Standard Bank’s youth division head.

These are Molanda’s top financial planning ideas to help you get started:

1. Draw up a personal budget

This will allow you to mark your achievement by choosing and developing the financial habits that will lead to future financial success.

Your budget should cover all your vital expenses, such as food, rent, telephone and transport.

Non-essentials such as the latest designer clothes or a new cellphone should not be in your basic budget – only those expenses that you absolutely cannot live without.

2. Establish what benefits you are receiving from your employer

The usual benefits include a pension, medical aid and sometimes a car or cellphone allowance.

If your salary package does not include a medical aid or pension benefit, take out your own. The same principle applies to gig workers, who are unlikely to receive benefits from their clients.

“It may seem too early to prioritise retirement savings, but there is a principle of compound interest at play in savings.

“If you start saving now, the principle starts taking effect in a few years to significantly boost your investment,” said Molanda.

Think early retirement and sipping cocktails on a yacht versus working till you’re 70, for instance.

3. Set up an emergency savings fund

This is for unforeseen events such as being retrenched from work, repairing an important appliance, or even helping family members who may be experiencing financial challenges.

“Having an emergency fund may not seem important when you do not have dependants or too many responsibilities, yet knowing that you are ready to handle any eventualities that may take place will give you peace of mind.”

While it is difficult to save as things get more expensive, even a hundred rand a month will add up to R1200 a year.

4. Write down your financial goals

Be specific about where you want your hard-earned money to go.

This could include buying a new laptop or car or paying a deposit on an apartment.

5. See a financial adviser

Molanda advises seeing a financial advisor when you begin earning, as these financial experts can advise you on the portion of your income you need to save and invest to realise your specific financial goals.

“Financial advisers are ideally placed to assist young professionals who are set to accumulate wealth over time,” she said. “Saving and investing in the right way now will enable you to live the life you envision.

Source: Fakazanews

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