Till a month back (before any job), we were labeled to be ‘good for nothing’, ‘useless’ by family and acquaintances alike. To prove it wrong, we eagerly wait for our salary day, hoping it would change our images for ever. The excitement and the nervousness grew as the D-day drew nearer of our first salary.
With this mixed feeling of eagerness and nervousness come another question – what to do with the first pay?
Deep in confusion, we tried to ignore it altogether. One day when our mother called up for the daily routine ‘check up call from home’, finally knew what to do with first salary. Seemed like a war eventually won, decided to go home, bow down to mother’s feet and put the salary into her hands. After all, she sacrificed all pleasures to fund studies, supported when others are against. But for her, I would have not come so far. All these thoughts freeze the decision. Happy to arrive at conclusion.
But, it all changes eventually when one day visit a friend, the moment he showed his latest smart phone using 3G services, it takes no time to alter decision and plan to buy a gizmo out of first salary. What follow was a treat to friends (beware of these KFC and Pizza Hut ads), gifts to family member, and a small party in home comprise of all yummy items all these cost not less then Rs.15000 and yes donation of a part of the salary to Hanuman ji etc.
A few months back, a friend of mine spent the entire first month salary buying expensive gifts for his family – jewelry, that wasn’t required at that point of time; and spent the rest of the month on a shoe string budget borrowing money from me and others. His family is extremely well to do – most of the gifts probably went into the locker, among the many more they already had. What was the purpose of all that I wonder? He had no answer of course.
The above is where most young professionals find themselves when it comes to their first jobs and first paychecks the most common story with one and all, but why is not the same when we talk about investments with the first salary, like we eat, we work, we sleep, we also need to invest. But what we first need to understand is what is investing, why do it, how much, and way forward. These issues are not that simple but a bit of financial knowledge can make things much simpler.
You don’t have to be a money whiz to know where or how to invest! The internet is flooded with information on every possible aspect of investing, so use it to your advantage. Besides, you can always have your parents’ brains for a little advice, and most advisable is to take the advice from Financial Experts yes you have read it correctly from first salary itself.
Investing doesn’t have to mean shares, bonds or mutual funds — although those would be good. You could also invest in some shirts and trousers for work, a decent pair of shoes and bag to match. The way you dress still plays a big role in the impression you create on your colleagues and your boss. So even if it’s switching from your raggedy pair of blue jeans to a more presentable pair, this investment does have a pay-off.
Ok, so you want to hurry up and start investing but you probably don’t know where to begin. Well, there are a few things you should do before you start investing.
8 things you should do First when you get First Salary
– Learn the new formula ‘Earning-Investing=Expense’
– Get Life (Term Insurance) and Health Insurance for yourself if you don’t have that, it will also give tax benefit.
– Start paying off your Loan i.e. Education Loan, Bike/ Car Loan etc, education loan also gives you tax benefit.
– You should start investing, what you need is stability, regularity and in disciplined way.
– Match your investing with your time horizon.
– Start keeping some emergency funds for emergency, 3 months expenses is probably the minimum.
– Remember never follow ‘Earning-Expenditure=Saving’
– Plan your Budget sure it’s a boring task, how often you go out, how much you spend on a meal, your monthly travel expenses all add up to quite a bit, so track your expenses for a month. That way you know how much you have, how much you spend and where you can cut down if you need to. A monthly budget is a great way to make sure that your pay lasts the month and a little longer as well.
Just before you take any decisions about your first salary read the first example of Rahul (My First Salary) once again and THINK over it again and again.