By Anja van den Berg
Few things beat the thrill of earning your first pay cheque as a young graduate. However, you may also be terrified at the prospect of being responsible for applying your earnings!
“If you’re a recent graduate earning your first income, starting your financial planning journey the right way is critical to your future financial success,” says Craig Torr, a certified financial planning professional.
Torr offers some financial tips to young employees. Take a deep breath and start making some plans to become financially savvy from the word go.
- Review your bank account options
The transition from student to full-time employee will probably require that you review the type of bank account you use to manage your finances. Do your homework to determine what account type is most suitable. You don’t have to stick to the same bank – cast your research net wide to consider all your options. Managing your bank account well is essential to building a good credit history. So, it’s worth setting time aside to get your banking affairs in order.
- Track your spending in real-time
Rope in your tech as part of your money management plans. Most local banks have first-rate apps to help you seamlessly track, monitor, budget and centrally manage your accounts. Make it a habit to track your spending in real-time. Use your bank’s app, or download a reputable alternative, to ensure your spending doesn’t exceed your income.
- Don’t wait a second longer to save or invest
There is no quick fix for getting rich. You need time … and compound interest! Start saving and investing the moment you earn your first pay cheque. Whether you’re saving for retirement or putting money aside for a future goal, there’s no better time than the present. Ideally, opt to automate your savings so that your premiums run off your bank account monthly. Be sure to review your level of reserves as and when your earnings increase.
Torr prompts graduates to understand the terms of their student loans to avoid missing any repayments, which can affect their credit score going forward. He also recommends staying away from debt as far as possible. If you must incur debt, don’t borrow more than is unquestionably needed and ensure that the debt repayments are affordable.