Starting your first job invokes mixed emotions. You are not only excited about beginning your professional life but are also anxious about your new responsibilities and life events that lie ahead. Landing your first job is also about getting regular paychecks. While the first paycheck should be celebrated, the subsequent ones should be put to judicious use to secure your future financially. However, an early jobber tends to not think too far ahead and focuses on his immediate needs and wants. The newfound financial independence should be enjoyed, but one should also not ignore these crucial financial tasks that will have a positive bearing on one’s future. So, as soon as you start working, ensure you work towards these items to secure yourself against future exigencies.
Turn The Saving Mode On
After splurging your first few paychecks, you should take steps that help you in saving your income. Saving will take you closer to your various financial goals like owning a house, buying a car or going for higher studies. So start budgeting as it will help you segregate income and expenses. The money left after meeting the necessary expenses is the money that you should save. And if you want this saved money to grow, choose investment instruments as per your age, income and risk appetite. At this stage, taking the help of a financial advisor would not be a bad idea.
Have An Emergency Fund In Place
This is an important task at all stages of life. For a beginner, an emergency fund is a must for any unannounced events like job loss, health emergencies, salary delay etc. So, as soon as you get into your professional life, allocate an amount towards an emergency fund. It will ensure peace of mind and save you from needless debts. Work on an emergency fund that can support you monetarily for 3-6 months, and keep it growing from there.
Understand Taxation And Work On Tax-Saving Plan
Tax is a dreaded word for many, especially for people you have just begun their careers. Tax planning is an important task and should be on your to-do list when you start working. As a first step, understand your salary components with the help of your Human Resource department. You can get a fair idea about your allowances and Tax Deducted At Source (TDS). If your income doesn’t fall in the taxable income bracket, you do not need to do anything. However, if your income is taxable, you can save taxes by investing in specified tax-saving instruments such as life insurance, health insurance and ELSS funds. Seek the help of a financial advisor who will help you sail through this.
Get Yourself Insured
Insurance is a protection cover that helps you deal with contingencies like death, disease, disability etc. A term insurance and health insurance plan in today’s uncertain times is a must for everyone. Ideally, you should buy insurance as soon as you get your first paycheck because you will get twin benefits of cheaper premium and hassle-free buying. Term insurance works as an income replacement tool for the insured’s family in the event of their untimely death. Health insurance will help you deal with rising healthcare costs. Even if your employer provides you with a group health insurance cover, you should buy an individual health insurance plan for better benefits.
Finally, besides the above-discussed points, keep some money from your income for recreational activities. Your mental health is as important as your financial health, so allocate some amount of money for entertainment, too.
The writer is CEO, BankBazaar.com