By Joan Mbugua
Starting a new job can be quite exciting. This also means you are able to make an income. As a first job, it’s very easy to get caught up in the excitement and forget to plan your finances. Here are 5 ways to manage your finances once you get your first job:
- Prepare for Emergencies
Life can be pretty unpredictable, drawing unexpected and unfortunate outcomes to your doorstep. From a chronic medical diagnosis or even a global pandemic such as Covid-19, you can never tell how much money you would have to part with to completely solve the problem.
While hoping that none of these befall you, preparing for emergencies will prompt you to create a financial reserve accessible for any kind of unexpected emergency. As the saying goes, failing to plan is planning to fail. You can start by opening a high-yielding savings account. You can find a number of products in the savings category at ABC Bank such as Pure Savers Account, Youngstar, Target or a Fixed Deposit account.
2. Control Your Spending
For a new job, you may get excited by having a salary at the end of the month and want to buy all the things you could not afford before. Establish a budget and always use a list while shopping. Additionally, some financial experts suggest hitting ‘pause’ before you buy an item you may want to take 24 hours to think about it before making a costly purchase. It gives you room to reconsider your purchase.
3. Adjust Your Budget
When starting a new job, adjust your budget to accommodate your new income. You may incur new expenditures such as transport for a daily commute, lunch, buying official clothes for work, rent if you move to a new location among others. Adjust your budget according to your needs. Remember that an increase in your income can lead to lifestyle inflation. Lifestyle inflation refers to the increase in spending when income increases. It is a state of being that leads people into a cycle of living paycheck to paycheck just to pay their bills.
With proper planning, adjusting your current budget according to your needs will protect you from this kind of lifestyle. A simple strategy would be, listing down the needs you would like to finance, set savings and investment goals and prepare the budget of choice. This should be done before you get your first paycheck to establish the discipline of budgeting early.
4. Saving for Retirement
It may seem a distant topic to engage in at this early stage, but it’s never too late to save for retirement. There is no better time to begin planning for retirement than when starting a first job.
Retirement can either be at 65 yrs if you are employed or early retirement when an individual feels they are financially independent and has accumulated enough assets to provide them with adequate returns to maintain their lifestyle. Begin early, and you could reap great rewards!
5. Talk to a Financial Advisor
Once you have a steady income, it’s time to think about your future and invest. Talk to a financial advisor because he/she understand complex financial situations and is able to break down the knowledge they have into understandable content.
Talking to a financial expert will enable you to avoid mistakes that those ahead of you have had to pay dearly for. You want to avoid pitfalls that set you back from establishing or achieving financial goals for a secure and bright future.
ABC Bank offers financial advice through our Relationship Managers that is customized based on your financial position and goals. Visit any of our branches or contact us for further financial guidance via 0719 015 000 000 or talk2us@abcthebank.com