Congratulations on your new job! We know how exciting it is to get money in the bank each month, and the temptation to buy stuff is enormous, but take a deep breath and follow the steps below to make sure you start looking after your financial wellness from your very first paycheque.
Start reducing your debt
Now that you’ve elevated yourself from student to employee, there’s something from your past that might be blocking your view of the future… Yup, your student loan. Many graduates face the reality of beginning their working lives with debt — the key to getting rid of it is to start paying it off as soon as possible. Ouch! If you can, consider making larger monthly repayments than the ones you’re mandated to make — that way you’ll pay down the debt faster and pay less interest as a result.
Create a budget
Your net salary is the amount you’re paid after all deductions like tax and employee benefits (more on that later). Think of your net salary as a line in the sand — you shouldn’t cross that line because it will just lead to further debt.
Once you know your net salary, you can create a budget for your monthly expenses. Start by listing the essential expenses like transport, groceries, airtime, and rent — and that pesky student loan repayment. The amount leftover is how much you have for general spending and saving.
22seven makes budgeting really easy. Download the app, link your bank account and you’ll have a budget up and running in no time.
Think of the future
As fun as it is to have money to spend, you shouldn’t forget about saving and investing a portion of your income. Saving is when you put money aside for future use — in case of emergency, or if you need to put down a deposit on a car, for example. Try to build up an emergency fund equal to at least three months’ worth of income. To make sure you keep contributing to this fund, consider setting up a monthly debit order that comes off on payday, so you don’t end up spending before you save.
Investing, on the other hand, is when you use your money to buy assets that will grow in value over time. There are many different kinds of investments, but the one you should consider immediately is contributing to a retirement fund. Speak to your employer — there’s a good chance you’re already contributing to a retirement fund as part of an employee benefits scheme. If not, set up a meeting with a financial planner who will be able to assist you in choosing the right retirement product to suit your budget and your life goals.
Give yourself a safety net
Life insurance is when you pay a monthly premium towards a lump sum payment that goes to a nominated beneficiary in the event of your death. It’s pretty important if you have loans that haven’t been repaid, or if you have loved ones who are dependent on you. Should the unthinkable happen, life cover will clear your debt and give your family financial security.
Some employers offer group cover as an employee benefit, which is often less expensive than getting life cover independently.
Ask the tough questions
We know it’s daunting when you start working at a new company but don’t be scared to ask questions about what is offered by the company and what isn’t. Find out which person handles the HR side of things and ask all the tough questions — it’s their job to answer!
Besides employee benefit schemes that might encompass retirement, medical aid, and life cover, many bigger companies also run financial wellness campaigns. Sign up and see what you can learn.
Congrats again, and good luck!