9 Things to Do When You Get your First Salary | My Money Sage
The first salary and the message that it is credited to your bank account is an exceptional and satisfying feeling for anyone who has just started earning. And, if this is your case, you might have started jumping in joy and excitement, planning to make the day a memorable one.
But, hold on there and take a deep breath. Instead of making impulsive decisions and do things that provide momentary satisfaction, start to think about how to make this new beginning worthwhile.
Here is the list of nine things, you should do after you get your first salary.
First of all, take out time to share the joy and express gratitude to your near and dear ones, who have supported you in your thick and thin period to help you reach this position.
Expressing gratitude and thankfulness is not only the right start to make but also makes you stay positive and motivate you to do more.
Create a Budget
Budgeting is the most important thing you should start doing after you get your first salary. In this process, you should prioritize the spending that is most important to you, instead of spending money without a plan.
The budgeting exercise ensures you spend according to a plan, and it also lets you know about your financial position in advance. Budgeting exercise is not just for planning expenses; its also how you allocate your salary to savings and investing.
As said by Warren Buffet, a famous billionaire investor:
“Don’t save what is left after spending; spend what is left after saving.”
Starting the practice of budgeting right from your first salary will help to keep your finances on track in the long term.
Clear-off Your Dues/Debt
Being debt-free is the most rewarding and effective way to live a peaceful life. If you have any loan account, start clearing it as soon as you receive your first salary. All your available resource should go after the servicing and clearing loans in the shortest time possible.
This ensures you don’t end up paying more on your loans in terms of interest. Keeping debt reduces the net worth of a person rapidly due to compounding. Further, it reduces your ability to accumulate wealth; that’s why living debt-free is incredible.
Create Short and Long Term Financial Goals
Having both short and long term financial goals is an essential step towards becoming financially secure. Whatever your goals are, whether creating a retirement corpus or buying a house or car or a foreign trip, you need to categorize all your goals so that you can allocate accordingly.
By starting early and contributing a small amount of money each month, you get enough time to accumulate wealth effortlessly. Creating goals not only help your money grow faster but also instills the habit of saving money and prevents unnecessary expenditure.
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Start to Invest
Even if you have not created goals or not sure of what you should do, no matter, you can still start your investment journey and allocate the funds afterward.
In the meantime, you can learn and explore the different avenues of investing, like which investing tool is best suits you according to your risk profile, etc. This will help you to make more realistic goals and allocate investments more efficiently.
Opt for a Health Insurance
Health is Wealth, and you should not ignore the fact. Beside getting busy with shaping your future, you need to protect it as well. Of many, the risk from health emergencies is highest. In the case of any health complications or hospitalization, its financial burden can severely affect all your goals and eliminate savings.
Having health insurance at an early age will help you get a good bargain on premium and also allows you to manage risks better. Further, you get the tax benefits under section 80 D of the Income Tax Act.
Also Read: Financial Planning for the Self-employed
Build an Emergency Fund
You always have an emergency fund in place, to take care of all your immediate requirement, in case of any emergencies. Life is very unpredictable, and most of the things which happen in life, you have barely thought of.
Situations like job loss, car break down or major repair to your home can bring in a lot of financial stress. You should start building a fund, which can take care of all your living expenses for the next six months. You can provision 3-5 percent of your salary towards emergency fund until you reach your goal.
Start Learning About Money Management
Money Management is a must-have skill set for every individual on this planet. Money management is not about just managing your income, but its a strategic technique to make your money yield more from given options.
Starting to acquire the skill early right after getting your first salary is the correct time. In this way, you get enough time to learn, implement, and correct your mistakes to fine-tune your approach. Also, the resultant financial implications of your mistakes will be very less, compared if you have started later during your career. Make use of free tools like https://www.mymoneysage.in/ for budgeting, saving, goal setting and investing.
Spend on Yourself
Reaching this point has been an undoubtedly challenging journey for you, with years of hard work, patience, and prayers. And, after you have invested much time on planning and utilizing your first salary in the best possible way, you finally need to reward yourself.
Enjoying the present moment is as important as planning for the future.
Getting the first salary is an excellent feeling which marks the beginning of a new chapter in adult life and also brings in more responsibilities towards yourself. It’s the reward of years of educating and transforming yourself.
While there are many options and things you can do with your first salary, but its always necessary to give a meaningful start. Because how you spend your first salary reveals a lot about you. Whether you will help yourself to maintain a good standard of life or let uncertainties to creep in.
So, kick-start this new exciting journey with an intent to become financially secure and independent, as your salary does not judge your worth. Instead, it’s decided by what you have saved.