Managing Your Finances
You’ve landed your first job. Well done! You’re likely to blow your first paycheck on something you’ve had your eye on for a long time (go on, you deserve it!), but as the months pass, the task of handling your finances can be overwhelming. To help you manage your money well, here are some tips.
Have a Budget (and stick to it)
If you don’t learn to manage your money well, you’ll soon realize that living from paycheck to paycheck is no fun. To avoid getting into a financial rut, draw up a basic monthly budget. Simply list down your monthly salary, and the amount you need to allocate for your fixed expenses, lifestyle expenses and savings. Knowing how to allocate your money helps control overspending.
Check Your Pay Slip
As soon as your salary is credited into your account, check your pay slip. Ensure that you have received all that is due to you, i.e. your basic salary, car, travel or medical allowances and reimbursements. Any discrepancies should be addressed with your Finance or Human Resources department. While errors are uncommon, they do happen, so it is best to be safe than sorry.
Honor Your Commitments
The first thing you need to do with your salary is to pay off all your monthly bills. Credit card or phone bills, as well as loan amounts need to be paid off early to avoid late payment charges. A hassle-free way of paying your bills on time is to arrange for a direct debit facility with your bank.
You’ll appreciate the money you put aside in a savings account when your car breaks down or your laptop needs an overhaul. The best way to ensure that you save is to immediately transfer your savings sum into a separate account as soon as you get your paycheck. What’s better is to arrange for an automatic payment into your savings account – this way you’re not able to spend the money, and you will soon build up a healthy savings fund.
If you get a bonus…
Save it! You can spend twenty percent of your bonus on something special for yourself, but the rest should be saved. Think of the freedom you will have to spontaneously go on an exotic vacation! The bottom line is: you just never know when the additional funds will come in handy.
An easy way of creating a monthly budget is to adopt the 50/20/30 rule.1 Allocate 50% of your earnings for essential expenses, such as groceries, rent, transportation etc. 20% should be put aside as savings (it’s never too early to start saving) and thirty percent can be put towards other lifestyle spending such as entertainment, shopping, phone plans, donations, hobbies and other miscellaneous spending.