HERE IS HOW YOU CAN MAKE THE MOST OF YOUR FIRST PAYCHECK
Read in: 3mins, Published On , 19 Aug 2020 By One India
HERE’S HOW YOU CAN MAKE THE MOST OF YOUR FIRST PAYCHECK
Tia, a 21-year-old writer, was excited to splurge her 1st salary. She already announced a party for her close friends. However, certain turn of events made her realise a few things about money. Here’s what she learnt:
LESSON 1 -
Understand your real income SCENE:
Not caring about anything else, Tia was happily ready to spend her entire salary of Rs.15,000. However, she had to cut down on a few things because only Rs.12,000 was credited to her salary account.
TAKE AWAY: Know your actual income. The amount that you take home is lower than the CTC offered to you during the hiring process because of several deductions made by your employer.
TIP: Do not plan to spend based on expected income. This will help you avoid ? nancial shocks.
LESSON 2
Create a budget SCENE:
Tia had Rs.12,000 for the party but didn’t have an actual budget listing out different expenses. While the cost of food and banquet hall was accounted for, there was an additional expense of Rs.1,500 because she wanted to utilise the pool area.
TAKE AWAY: After knowing your take-home income, create a budget to use it optimally. Know your actual income and expenses and divide the money accordingly between your needs and wants.
TIP: Don’t suppress your wants. Regulate your spending with the 50-20-30 rule of budgeting; allocate 50% of your income to your needs, 20% towards your debt and investments and the remaining 30% to your wants.
LESSON 3
Prioritise repaying Debt SCENE:
There were some dues outstanding from Tia’s birthday party last week that her parents hosted. The same were added to her bill which naturally increased the amount payable.
TAKE AWAY: Debt will keep on growing unless you nip it in the bud. Try to clear your dues whenever you have money.
TIP: Do not take another loan to clear your existing Debts. This will help you avoid the Debt trap.
LESSON 4
Plan for Taxes and retirement SCENE:
Taxes levied on the ? nal amount further led to an escalated bill. She had to fork out extra money to clear it.
TAKE AWAY: Planning for Taxes is important. Also, the luxury of paying everything without a second thought may not be available when there is no regular ? ow of income. Thus, retirement planning is important too.
TIP: Estimate your Tax liabilities and retirement corpus with the help of online calculators.
LESSON 5
Invest SCENE:
Things didn’t turn as expected only because of Tia’s miscalculations and ? nancially wrong moves.
TAKE AWAY: Financial discipline is a must for managing ? nances. Create a saving and investment plan to have enough money at your disposal.
TIP: Do not wait to accumulate a large sum to invest. Beginners can enter the investment world with small and regular investments in Index Funds.
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