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The top 4 things to do when you receive your first pay cheque
By James Yeo
Receiving your first pay cheque is always an emotional and exciting moment.
It signifies the first milestone of materialising the hard work you poured into your education and learning all these years. It also now means that you are a responsible and productive member of the economy.
This brings us to the question: “What should you do upon getting your first pay cheque??”
Here are 4 things that you could do:
1) To party or not to party?
Getting that first paycheck calls for a celebration. And for many young professionals who are just starting out, the first thing that comes to mind is probably to go for a big night out with friends. And why shouldn’t they? After all, they have earned it.
While you may have a strong temptation to squander all your money by partying away during the initial few years of employment while earning money is still novel, try not to overdo it!
Many people have come to regret spending lavishly for the first few years of their working lives because that is actually the period of time during which they have no commitments and are thus able to save up.
2) Live within your means
People who often wonder where their ‘savings’ go to usually do not have a concrete plan or budget.
As their income rises, their expenditure also seems to follow suit – rendering any salary increment pointless. Thus, ensure that you do not ‘upgrade’ your lifestyle overnight because it is hard to turn back once you get used to an expensive and comfortable lifestyle.
Instead, take full responsibility for your financial health and plan your expenses in line with your income. Preparing a budget ignites a sense of responsibility and allows you to stay on track.
3) Pay off your debt (if any)
As a rule of thumb, you should always pay off your debts first, especially the tuition fee loans for young, aspiring employees.
A check of the education loans online reveals that the interest rates come in at a minimum of 4 per cent. It doesn’t feel good having a ball and chain tied to your leg and continually becoming heavier as time goes by right?
Thus, when you undertake a student loan, set a plan on how to work toward repayment of debt as soon as you start a job. In fact, this is the best time to take full charge of your liabilities to prepare you for more financial responsibilities in future.
4) Look at the bigger picture
Last but not least, you have to look at the bigger picture.
While the first paycheck may just be a drop in the ocean as compared to your lifetime earnings, it is going to set the base for your future actions toward financial stability.
Kickstart your financial journey by at least doing the following:
Set up a savings account
Contribute at least a small amount savings regularly to fulfil bigger goals later in life
Maintain a rainy-day fund for emergency situations
Insure yourself through different policies
Make your money ‘grow’ more money through smart investing
One good example may be that you or your loved ones may suddenly require a huge sum of money for some health issues on a short notice. The insurance may provide the necessary coverage to waive off the huge medical bills and the emergency fund may come in handy to tide you over the difficult times, too.
Conclusion
To sum up, getting your first paycheck requires you to now step up the game and be in control of your finances. But you should not be overly worried. Instead, celebrate the joy of being financial independent and the freedom to make your own calls in future.
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