How To Manage Your First Salary Wisely
Finally landed on a job and got your first ever salary? Wondering how to manage your first salary wisely? Well, I will take you through proven ways to utilize your first ever salary wisely that will positively affect your subsequent salaries. How you utilize the first ever salary could possibly tell the path your financial life will take in your subsequent salaries. If your first salary is not managed properly, your financial future could be in a jeopardy, therefore, proper salary management tips are needed to utilize your salary to avoid falling in huge debts, non beneficial subscriptions and a lot other mistakes which first time salary takers make. The idea that your salary is recurring monthly allows you to spend extravagantly, while spending money on things that bears no fruit. Instead of that, plan, make financial goals, make budgets to guide your spending habits, start a good insurance policy, start saving for emergency and retirement.
Avoidable Mistakes First Time Salary Takers Make
First time salary takers do make a lot of mistakes by mismanaging their salary. It some times seems you get financial ideas when you are broke and seem to forget them when the salary finally dropped. Below are some avoidable mistakes first time salary takers should note.
✔ Avoid procrastination: Use your salary as scheduled earlier, do not procrastinate financial responsibilities to the next month.
✔ Taking Loans: First time salary takers should desist from taking loans or else paying them fully will be another topic for discussion. Try to spend what you have and avoid taking loans at the moment.
✔ Overspending: First time salary takers sometimes do spend beyond boarders which negatively affect their subsequent salaries.
✔ Advanced spending and borrowing: While waiting for their salaries, first time salary takers believes the future is bright so do make some advanced expenditures and borrowing, hoping to settle that after receiving salary.
✔ Lack of financial preplanning: “All we know is, let it drop” there are no financial preplanning such as budgeting and financial goals and achievement.
Benefits Of Managing Your First Time Salary Wisely
There are great benefits if you could properly manage wisely your first salary.
1. Managing your first salary properly leads to financial success.
2. Proper salary management paves way to making good use of your hard earned salary.
3. Preplanning in salary management gives a promising financial future.
4. It helps avoid unnecessary borrowing which can negatively harm your subsequent salaries.
5. It allows you to prepare for emergency and retirement.
6. Proper first time salary management propels you to chase your financial dreams.
How To Manage Your First salary Properly
Salary management is a master tool to put your finances in better position other than all financial odds you could mention. If your first salary which will pave way for the subsequent salaries in your entire life is not managed wisely, could harm your finances. Below are tips on how to manage your first salary wisely to avoid financial odds.
1. Set Financial Goals
While waiting for your first salary, take time to plan your financial goals and achievement, these goals and achievements could be long term or short term goals, that doesn’t really matter. What are your financial goals? To start saving towards investment? Fund your child’s education or pay for your rent or perhaps have a serous surgery done? Discover all that you want to do with your money, and divide them into long-term and short term goals. Setting up financial goals will guide you against off track spending while working to achieve your financial goals.
2. Budget Your Expenses
Make a budget for your expenses which means that you should have a plan on what to spend, where to spend and how much to spend. You should know the amount of money you need to spend, to pave way for proper management of your salary. Budgeting your expenses will help prevent overspending and allow you to spend accordingly.
3. Save a Maximum Percentage
The next step to properly manage your first salary is to start saving a maximum percentage of your income. In which ever method you want to save your income is no issue, a savings account is good since it gives interest on the principal amount in the bank. It’s advisable to separate all accounts because consolidating your finances in one salary account wouldn’t help. The account through which you receive your salary should be separate whiles savings account, emergency savings fund or retirement fund dwells in separate accounts each to avoid beyond the boarders spending.
4. Pay and Avoid Debt
If you you were in debt whiles yet to receive your salary, pay it off and avoid falling into debt again. Debt is a very harming factor that retards the progress and financial successes of salary workers. The truth is, if you don’t avoid taking loans especially long term loans as a salary worker, you could land yourself in killer debts which will cost you a lot to repay. One jeopardizing fact is that, you live in recurring debts “pay loan and take loan again”. It’s better to live solely by your salary than seeking for financial independence with loans and debt.
5. Make Investment
It’s important to start investing your income on profitable ventures that could increase your returns in a certain period of time. You can open an investment account to enhance your ability to start investing. Opening a high-yield savings account or savings account is another way of investment since these accounts gives interest depending on the principal amount. The stock markets, stock bonds and shares are all different ways to invest your money for profitable returns. Owning a personal asset is another way of investment since you can sell it once it becomes profitable.
6. Get an Emergency Fund
One inalienable fact of life is unforeseen contingencies, no one knows what happens the next minute and so being wary and prepared is the best option. As you receive your first salary, set apart an amount to start an emergency fund that could be used when unplanned expenses encroaches. Death, accidents, job loss and other unplanned expenses do come unawares and when that happens, hospital bills, medical cover, rent and other emergency expenses could be taken care of by the emergency fund you set apart.
7. Start a Retirement Fund
“Being youthful you ought to be useful” so “make hay while the sun shines” it’s very much important to start thinking about retirement the first day you got your first salary because the same way you took your first salary, that same way you will take your last salary. Start planning for your retirement by getting your retirement account where small deposits could be made from your monthly salary towards your retirement. Again, start contributing to social security and national insurance trust (SSNIT). This will soothe your financial future and put you in better financial state in your retirement.
8. Get an Insurance Cover
Start a good insurance policy to cover your life and property. However, do not jump into any insurance you may think of, first review and examine it’s policy well before subscribing.