Simple Financial Tips for Young Earners

young earners
Photo Credit: Ann Cudis

Congratulations! You landed on your first job after your graduation or after a long series of job hunting. You might have been very excited to see your first paycheck. You might have also been pondering about your first purchase with your first salary and the  rests that follow.

You might also be someone who is in the job for a year or two – a job that you sweat your gut out to seize among multitudes of competitors. Well done! You must be the cream of the crop.

You are young and energetic and full of dreams. In your active imagination is the unfolding of your cherished aspirations.  It can be a new pair of shoes  or a  gadget that you are longing so much to upgrade. Maybe a brand new car that you believe you can pay in a few years time. Maybe you are thinking there is nothing wrong with that. After all, you’re now spending your own hard earned money.

But wait! Stop! Don’t rush! This may also be the best time to mull over getting your finances straight from the onset. The truth is, it is easy to spend money and be distracted with fancy lifestyle… and a lot easier to overlook the essentials.

So let’s navigate some practical financial management tips for you, young earners.

1. AVOID THE BANDWAGON: Make a conscious decision not to follow what everyone else is doing. When the crowd wants the latest smart phone, ask yourself if you need to change your still well running phone. When everyone else is eating out in cafes and restaurants once too often, ponder whether it is worth to do the same. Remember that you are just starting your adult financial life. As Riju Dave of ET Bureau says, “Financial freedom is not achieved the day you start working, but the day you get your finances in working order.”

2. SAVE SAVE SAVE: Whether you earn big, or just enough or even a little, endeavor to stash some money away. Set an account in your bank that will automatize a certain percentage of your salary into savings. Be in control of your life by being in control of your finances. Don’t plan on living paycheck to paycheck. Worse, don’t plan on working hard and spending your money even before you earn it. That is like picking a piece of rock and hitting your head with it.

3. CREATE AN EMERGENCY FUND: Guys and gals, when you take on your first job, take into consideration that building your emergency fund should be a bigger fish to fry in your list of what to do with your emolument. What is an emergency fund for? For emergencies! Sometimes there are unexpected expenses such as a huge medical bill or your car breaking down or a job redundancy and the likes. Emergency fund is your financial cushion to keep you adrift in some unpredictable scenarios. This will largely help you from falling into huge credit card use or taking a loan or relying to others to save you temporarily but will eventually put you into a more desperate position. It is recommended that you set aside three to six months worth of money to cover your living expenses. Place it somewhere where you can access quickly in times of emergency. You may open a bank account dedicated for emergency fund which is separate from your operational account.

4. AVOID OVER-CONSUMERISM. You are a neophyte in earning your own money. It is understandable that you are also starting to write down the list of your needs and “what to haves”. To want is not bad and I am not suggesting that you be too stingy to self-suppress. Since this is just the outset of your long financial journey, be careful with your spending. Don’t get trapped by over-consumerism. By this I mean spend only on things that you need, things that work for you, things that afford its major functions to your daily enterprises.  Don’t be carried away by advertisements of what you must have to be in or to look cool. More so, never attempt to compete with your friends,  neighbors or workmates in the material accumulation race. I’m pretty sure you’ll end up a loser.

5. PAY YOUR DEBT FIRST AND DON’T ACCUMULATE BAD DEBTS. The biggest financial hurdle of most new earners is the existence of student loans they have accumulated towards finishing a degree. It is undeniable that a student loan is a good debt but it is still a debt that one has to pay. If you have a student loan debt, it is wise to confront it head off. Lay out your financial strategies to take that burden off your shoulder. Again, fight  the unnecessary spending temptations. And while your loan to get a university qualification is still on queue, never get allured on scoring a bad debt like drawing credit for a new car or an expensive signature bag or whatever is on trend. Balance your earning with your spending.

6. HEALTH INSURANCE. If you live in a country (like the Philippines) where getting ill and hospitalization will suck the best of your financial energy, acquiring health insurance can be a great buffer. Just tread carefully and comprehend every little detail so you know your coverage and what you are signing for. I’m not trying to spread an air of uncertainty here but the truth of the matter is, disaster strikes anytime. You or a family member may fall ill and you don’t want to be under the water if that happens, right?

7. LIVE SIMPLY. For most people, living simply does not tickle their fancy. Please understand that living a simple life is not synonymous to being unambitious or curtailing one’s desire to progress. It does not even mean anti-consumerism because all of us are consumers. Instead, it inspires non-adherence to materialism to attain work life balance and to achieve a less stressful life.  It is a springboard to financial sustainability.

As young earners, it is good to start things right. There may be some roadblocks on the way but these are easier to overcome when you are armed with the know hows of good financial planning and proper financial execution. While it is true that there might be some events in our lives that may happen beyond our control, proper preparation can hold the explosive power to overcome these hurdles. Have a positive relationship with money. Only you can lead yourself to financial freedom. Why not strive for it as early as you can?

 

 

 

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close