Practical first salary tips for new graduates

The thought of earning your own income can bring joy in your heart. And in the moment, you start planning, researching and buying everything that you previously couldn’t afford. 

Almost everyone has gone through this experience, and many have made numerous mistakes they could have avoided had they been equipped with the right knowledge. Information is a great tool to use to make better decisions. With that said, we’ve put together useful financial advice for new graduates to help you learn how to look after your money. 

Focus on yourself first 

You’ve graduated the same time as your friends and possibly shared how you’ll spend your first paycheque. While there’s nothing wrong with that, you’ll need to do some introspection first before you make any decisions. Think about how your life is set up in comparison to your peers. Chances are, your needs are not exactly the same. So, you’ll have to think hard about your plans and match them with your needs. Forget everything, and everyone else, and focus on yourself first.

Create your budget

Creating a budget is the best thing you can do. A budget helps put financial decisions into perspective, and it teaches you how to save money. The easiest way to create a budget is to draw up a list of needs and wants. Needs are things like groceries, transportation money or petrol money, student loans, family responsibilities and so forth. On the other hand, wants would refer to things you can live without, such as luxury clothing items. 

Don’t spend more than you earn

It’s easier to fall into the trap of spending more money than you earn because you think you will recover. Even if you can recover, it’s not worth the pressure. You have to be in control of your money and not allow for the money to be in control of you. This is why creating a budget is essential. 

Be careful of the small amounts

We always talk about how it’s the small things that count, and this is true in the financial sense as well. You’ll find yourself buying data here and there, or coffee and a bagel here and there. In the end, these small expenses become a big amount. And that’s okay. But planning ahead will help you navigate around these unforeseen expenses better. Put these in your budget, so you know where all of your money is going. For example, if you know you’ll likely buy coffee and a bagel three times a week, combine that amount as a monthly total and add it to your budget. However, none of this means you can’t get yourself an unplanned slice of cake or even a pair of sneakers. It simply means being mindful of your spending.

Start saving now

It sounds a little unfair to ask a new graduate to start saving when they’ve just gotten their first salary. But saving money shouldn’t be an intimidating task, don’t think big amounts because you can start as small as you can afford. That money will go a long way. Again, the small amount of money always adds up to big amounts in the end. In this case, you will thank yourself for starting earlier. So, open up a short and long term savings plan as well as an emergency savings plan for possible unplanned events. 

Allocate money towards benefits

Some companies will offer you a job with packaged benefits. At times, this will be compulsory, and in some cases, you may be given a choice. Some companies will not offer you these benefits, which means you’ll have to handle them on your own. Whatever the case may be, it’s important to put money towards benefits. These include medical aid, income protection, retirement plan and life insurance. Do some research on these type of benefits and find out about the organisations which offer these services, and align them with your needs and your budget. Do some thorough shopping around and speak to experts in this field so that you don’t find yourself tied to a plan that isn’t useful to you. 

Seek help 

Life is unpredictable, and there will be times when wants will become needs. When that happens, you might start to feel the pressure if you’re still unable to afford the new need. For example, you might find that your job requires you to have a car. But you haven’t saved enough yet. This is where you can seek help, and fortunately, there’s plenty of help available for graduates. Using the car example, a simple search on the internet will show you available options for vehicle finance for graduates. Speak to the right people with the right knowledge. Once you’re satisfied with the information provided, and you feel ready, you can apply for graduate finance to help alleviate the pressure. 

Have a plan for debt settling 

Planning helps you to prepare for all possible outcomes. You don’t want to have things to escalate from “getting my first car” to “three months behind with payments”. To protect yourself and ensure that you’re in control of your finances, have a plan for debt settling. Use the internet to search for information that will help you or speak to your loved ones and get advice from them. Take it a step further and speak to experts if you feel you need to be more equipped with enough information before making a decision. 

We hope that the above graduate finance advice will help you to start drafting a plan for your first salary. Just remember, along the way, you will make mistakes. You’re only human, but the important thing is how you get yourself out of these mistakes.