There are several strategies that you can use to start saving from your first pay cheque. Unless you were born with a proverbial silver spoon, when you get your first job, it’s like the flood gates to a pot of gold opened.
When I was in university, I promised myself that when I landed my first full-time job, my life would change. All I wanted to do was to put in my own telephone line and install cable in my bedroom. I was absolutely smitten with the idea of having MY own money to do whatever I wanted.
Thankfully, I did not do either of those things because I caught on to the reality of life very quickly. Instead of looking for ways to exercise my independence in the short term, my mindset shifted to focusing on how I could secure a desired way of life for the long term.
As a result of this shift, my financial behaviours soon followed and I was making better decisions about how to make the most of my pay cheque. Admittedly, this was not an overnight process, but instead it took a while before I found a groove that worked to my benefit. I hope that these suggestions can point you in the right direction as you aim to save some of your hard-earned income.
1. Review Your Pay Slip
When you receive your first pay slip at the end of the month or pay period, check how much your take home pay is. This figure is the resulting calculation after deductions. Social security and income tax are the first two to be deducted and these go straight to the government. Depending on your work contract, there may be deductions for a pension plan, health insurance and/or life insurance.
2. Create a Budget
After you have reviewed your pay slip and noted your take home pay, you should create a budget. Your budget is based on your net income and should be tailored to what you take home each month. The budget, in simple terms, is an organised map for how you will spend your money each month. If you start budgeting from your first pay cheque, you will find that it will be easy to start saving from your first pay cheque.
3. Create a Saving Strategy
The beauty of saving is that there are several techniques that you can use to put aside a chunk of your earnings. The first step which is where you decide how much to save is quite simple. You may decide to save half of your salary or to save ten percent of your salary. The next step is to decide if you will save via a high interest account, an investment account, a money market fund or a pension fund.
4. Plan for Retirement
When creating your saving strategy, consideration should be given to your retirement. Although you may think that retirement is a far ways off, especially because you’ve just started working, now is the best time to start planning for your retirement. The benefit of this is that you have several years to contribute to a retirement fund which will accumulate over the years.
5. Use Debt Wisely
If you have student loans, paying them off might be at the top of your list. The quicker you can pay off these loans, the sooner you can move on to the next step in your life. However, if you’re starting off with no debt, you are in a position to use available debt vehicles to make some money. Real estate investing, if executed correctly, is a smart side hustle that can result in thousands of dollars in extra income.
Further Reading About Saving From Your First Pay Cheque
- How to Save Money from Your Salary (Chime Bank)
- What to Do With Your First Paycheck (Life Hacker)
- What to Do With Your First Paycheck (Simple Bank)
- How To Save And Spend The First Paycheck (GenFKD)
- Welcome to Your First Job: Here’s How to Manage Your Money From Day One (The Muse)
- How to Make the Most of Your First Paycheck (The Balance)