Starting your first job brings excitement, but also new financial responsibilities. It’s a great time to develop healthy money habits. Although managing finances may seem challenging at first, by taking small steps and making smart choices, you can feel more in control.
Vishal Dhawan, CEO and founder, Plan Ahead Wealth Advisor, and a Sebi-registered advisor, advises first-time job holders: "Save a portion of your income before spending and set up automated savings with SIPs or recurring deposits. Make sure you have health and term insurance for extra protection."
Here are 5 tips for managing your finances after starting your first job:
1. Track Your Spending:
Monitoring your spending from the beginning is essential. Start by noting significant expenses, such as rent and utilities, and then add the minor daily costs, such as entertainment, food, and transportation. You can identify areas of overspending and make necessary adjustments to your budget by tracking where you are spending.
2. Start Investing for Future Goals:
Start investing as soon as you start earning even if it's only a little. By forming this routine early on, you may help yourself attain long-term goals like retirement or home ownership by allowing your money to grow via compounding.
Vishal Dhawan suggests, "Invest a portion of your income in safer instruments to prepare for unexpected events like health emergencies or job loss. Choose investments with the appropriate horizon, particularly in equities and be prepared for market volatility. Also, avoid investing in complex instruments such as futures or crypto unless you fully understand them."
3. Maximize Employee Benefits:
In your first employment, managing funds also involves making the most of employee perks. Apart from your pay, these perks may consist of retirement plans, health insurance and other things. By understanding and utilizing these offerings, you can make better financial decisions and maximize employer support for a stronger financial foundation early on.
4. Consider Tax Implications:
It’s essential to understand how taxes affect your investments when starting your first job. Select tax-benefitting investment alternatives such as Employees Provident Fund or Public Provident Fund. You may maximise your savings and minimise your taxes by choosing one of these choices which increase your savings while lowering your taxable income.
5. Automate Your Savings:
Setting up automatic savings is an easy way to manage your money more effectively. As soon as you start receiving your salary, arrange an automatic transfer to move a portion directly into your savings account. This makes saving effortless and consistent. This ensures savings come first, even if it’s a small amount. Automation supports consistency, helping you build a savings habit without thinking about it, and sets you up for long-term financial success.
