How to Spend Your First Salary

Your first job might throw up many challenges, such as adjusting to a new environment, workload, gaining confidence to voice your opinions and time management. But it also provides one of the greatest satisfactions of one’s life, your first salary!

But with the first salary comes a great dilemma. How to make the most out of it? Getting gifts for your loved ones is a great idea. But many people manage to spend their first salary in a puff of smoke, due to poor financial understanding. In fact, almost 76% of Indian adults do not comprehend the key financial concepts, as surveyed by Standard & Poor.

Here are some of the ways you can make most out of your first pay.

1. Open a Savings Account

It is never too early to start saving. If you don’t have a savings account yet, open one as soon as you get your first salary. Savings accounts are extremely helpful tools that allow you to grow your income. There are savings accounts that offer interest rates of up to 7%. There are also special types of savings accounts for corporates. The features of these savings account include zero charges for transfer through RTGS, IMPS and NEFT, and unlimited free ATM transactions. On top of that, these are zero balance accounts. A savings account can be easily opened with just a few documents.

2. Get Insured

With medical costs reaching new heights each year, getting medical insurance has become a necessity. The burden of medical costs can put a serious dent on your savings and financial goals. In case, you have those who depend on you, it is better to choose an insurance plan for the whole family. In addition, getting insurance also provides you tax benefits.

3. Start Investing

It is a great idea to start thinking about growing your wealth from the first paycheck itself. Keeping your salary in a savings bank account is a good idea, but if you are looking for a way to build up a good corpus over time, mutual funds are a great option. Although there is a degree of risk associated with them, mutual funds are especially great for beginners, since they are taken care of by expert fund managers. These fund managers constantly study the market and different companies to find out the best investment options.

You also have the advantage of SIPs with mutual funds. Systematic investment plans allow small regular investments instead of making lump sum payments. You can start as low as ₹500.

4. Clear Your Debts

Whether you have credit card loans, student loans or any other debt, it is best to eliminate them as soon as you get your salary. These debts generally have a high interest rate and can easily eat into the money in your savings bank account.

Be it opening the right type of savings account or investing in mutual funds, make sure you put your first salary to good use.

About This Author

Shaheen Shaikh http://www.adrclinic.co.uk Joined: April 29th, 2018