As a young person, landing your first job calls for a celebration. More crucially, however, it is an opportunity to plan your future financially from day one.
Your first pay cheque and what you do with it gives you a chance to set yourself up for life, where you can meet current and future financial obligations, feel secure in your financial future and make choices that let you enjoy life.
It will also help you make your big dreams come true, says Tshiamo Molanda, the executive head of youth and mass market at Standard Bank.
Here are Molanda’s top tips to help you plan your financial future from the beginning:
1. Draw up a personal budget
This will allow you to mark your achievement by choosing and developing the financial habits that will lead to future financial success.
Your budget should cover all your vital expenses, such as food, rent, telephone and transport.
Non-essentials such as the latest designer clothes or a new cell phone should not be in your basic budget – only those expenses that you absolutely cannot live without.
2. Establish what benefits you are receiving from your employer
The usual benefits include a pension, medical aid and, at times, a car or cellphone allowance.
If your salary package does not include a medical aid or pension benefit, take out your own.
The same principle applies to gig workers, who are unlikely to receive benefits from their clients.
“It may seem too early to prioritise retirement savings, but there is a principle of compound interest at play in savings.
“If you start saving now, the principle starts taking effect in a few years to significantly boost your investment,” said Molanda.
Think early retirement and sipping cocktails on a yacht versus working till you 70, for instance.
3. Set up an emergency savings fund
This is for unforeseen events such as being retrenched from work, repairing an important appliance, or even helping family members who may be experiencing financial challenges.
“Having an emergency fund may not seem important when you do not have dependants or too many responsibilities, yet knowing that you are ready to handle any eventualities that may take place will give you peace of mind.”
While it is difficult to save as things get more expensive, even a hundred rand a month will add up to R1200 a year.
4. Write down your financial goals
Be specific about where you want your hard-earned money to go. This could include buying a new laptop, car or paying a deposit on an apartment.
5. See a financial adviser
Molanda advises seeing a financial adviser when you begin earning, as these financial experts can advise you on the portion of your income you need to save and invest to realise your specific financial goals.
“Financial advisers are ideally placed to assist young professionals who are set to accumulate wealth over time,” she said. “Saving and investing in the right way now will enable you to live the life you envision.”