Once you graduate into the working world, it can be intimidating and difficult to understand how to budget your money. Your first paycheck would most probably be used for buying your friends a round of drinks. The second and the subsequent ones, if used judiciously, can actually pave way for a sound financial future. With high-tech gadgets and brand new clothes competing for a chunk of your earnings each month, money management can make your head spin.
Here, we have put together a list of things that financial advisors recommend to steer you towards a successful future.
1. Tackle your debts - If you have taken a personal loan for education in the past, you should start repaying it at the earliest. Remember, the earlier you start repaying the lesser would be the interest you pay back, hence ultimately saving you money. If you find that your monthly repayment amount is very high, you can get in touch with your lender and chalk out a repayment schedule that fits your budget.
Another important thing to know when tackling your debts is to reconsider your needs. If you were staying away from home while studying, now is the right time to move back home if possible. This way, you can pay off your debts with the savings you make on accommodation.
It may be tempting to get your hands on that stylish set of wheels that you have longed for during your student years. With a plethora of car financing options available in the market, getting in the driver’s seat of your dream car might actually seem like a possibility now. But wait, if you are struggling to repay your existing loans you should reevaluate your needs to avoid piling on more debts.
2. Plan for retirement - When you get your first job, you should educate yourself on the retirement benefits offered by your employer. Most companies match the employee’s contribution towards his/her provident fund. Apart from this, you can consider investing in a life insurance scheme with retirement benefits. Remember, it is never too early to save for your retirement. In fact, getting a life insurance policy at a young age will bring down the premiums you pay towards it. So, this is the best time to opt for one.
3. Learn about employee benefits - You should spend some time on understanding the additional benefits offered by your employment. Here is a list of some perks you may be eligible for:
a. Health insurance protection
b. Corporate discounts
c. Bonuses
d. Tuition assistance
e. Paid time off
4. Understand your spending pattern - You should review your bank statement regularly to keep track of your income and expenses each month. Making a monthly budget is a great way to stay on top of your finances.
5. Learn about taxation - Tax is an area that is greyish in the minds of even experienced personnel in the workforce today. Ideally, you should learn about the way in which tax is deducted from your salary. You should also be aware of the documents you need to submit at the end of the year to come clean. In case you have invested your money in fixed deposits or savings schemes, you should be aware of how this affects your taxes. If you are donating regularly towards a charitable organisation, keep in mind that you can save on your taxes.
6. Figure out your short-term financial goals - Planning to fund your wedding? Thinking about a dream honeymoon in Mauritius? Or is it a penthouse on your mind? This is a great time to think about some of life’s most expensive milestones. You not only get the benefits of saving early, these milestones will also look a lot less intimidating when it is time to act.
7. Improve your skills - After you settle down in your new role, you should remember to keep honing your skills to advance in your career. The thumb rule is to dedicate at least 1 hour each day to learn something new about your job. This way you can beef up your skill set and also put your learnings to practice. This will only help you grow in the organisation and gain on the financial front.
Saving for the future and investing in yourself are necessities to boost your finances. But it is also necessary to let your hair down once in a while and celebrate your successes. The financial situation of each individual is different from the other. It does take some time to develop a plan that is suited for your goals. You may find that a bit of trial-and-error would help in figuring out how to effectively save for the future and make those savings grow. The sense of satisfaction you get in seeing the rising figure of your savings is sublime indeed!
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