By Dikonelo Mile
If you are reading this article, you’ve possibly had your first salary or know someone who did. Whether it’s a first time job, the new position you have always wanted, or your business is going well and you have cut yourself a cheque, most of us relate to getting the first salary.
This moment is usually one that is celebratory. What most people do, is spend on things they have always wanted to acquire. If I recall, my first paycheck found me in whilst I was in Cape Town and at that moment all I could feel was gratitude, Camps Bay and all the bags I have
always wanted (womankind syndrome).
Whilst celebrating achievement is an absolute necessity, the issue with this approach is that one salary becomes the next until you spend your monthly earnings, paycheck to paycheck.
How you spend your first salary will say a lot about the financial direction you want to take. According to the 2017/2018 Old Mutual Millennial Report, the pitfalls most millenials fall into, are: high levels of debt, saving rather than investing, keeping up with the Kardashians and not defining one’s values.
One would argue that, if you have worked hard, you should celebrate yourself, however, justifying unplanned spending with celebration is harder to come back from than getting it right the first time.
By the time you are able to earn an income, you should think of ways to increase your net worth no matter how many zeros are on your paycheck.
Because we are for financial wellness, here are some interesting insights to consider for structuring your first salary.
Saving and Budgeting
Saving and budgeting are the basic foundation to any financial plan. In order to know how much to put away towards your savings, you must calculate which expenses to cover and how
much they are going to be more or less. This step however, is one that is taken lightly and dreaded the most. Lucky for us, there is technology to automate the process of budgeting and saving. You can download Apps such as 22seven, moneysmart and my financial life in order to save time and not feel like saving and budgeting is a heavy task. You can also set up monthly debit orders towards your savings. When saving, choose a deeply inspirational goal to save for or even find a saving partner.
Remember to save first and spend last.
When choosing a budget, choose one that best represents your lifestyle. A balanced budget usually covers necessities such as food and shelter, long term investing funds, education, entertainment and giving back. It all depends on what priorities you have at that particular stage in your life.
Dikonelo Mile is the founder and MD of accounting firm Success Tunes. She writes in her capacity as Read more on financial literacy, investing and protecting what you earn in our next edition.