decisions to take on YOUR FIRST JOB
THE TRANSITION FROM BEING A STUDENT TO AN EMPLOYEE IS EXCITING AS WELL AS CONFUSING. HERE ARE THE FIVE THINGS THAT AN INDIVIDUAL MUST CONSIDER ON THE FIRST JOB.
After years of hard work, Susheel’s got placed in a prestigious media house. Susheel was happy that he had a good start by getting selected for a job in a well known organisation and a bright career ahead of him.
Susheel, however, was bittersweet on his accomplishment as he had an education loan outstanding to take care of as well as the financial liability of his retired parents. Susheel also wanted to save some money to be able to buy a vehicle to commute to work.
With a number of thoughts rushing in his head, Susheel took the advice of his uncle who works as a financial adviser.
Let us take a look at the five golden priorities that Susheel was advised to give immediate attention to — the advise given to any individual on the first job.
Repayment
of education loan should always be the first priority, if you have such an obligation. Banks offer a sixmonth waiver for all education loans and during that period you are not liable to repay the loan. However, there is no restriction within the waiver period if the borrower wants to start repaying the loan. As it is, the interest over the loan amount, for all loans, interest calculation is made right from the disbursement date. The sooner one starts repayment the education loan, the earlier it is likely to be completed, allowing the borrower to focus on other essential matters later on in life. Also, the accumulating interest also will be less.
SThe
sooner one starts investing in life; the better is it for the individual. There are many stages of effective investment planning and one is better off taking the services of a professional investment advisor to understand the financial risks in various investment vehicles and chose those schemes which are appropriate for the individual. For people just starting their career, it is not a bad idea to invest in mixed assets which includes shares, SIPs, debt bonds, or Ulips, because as you have ample time to grow your wealth, and free from other burdens, it is worth taking a
little risk. tarting out on a job gives a new financial freedom to individuals. The transition from student life to a working individual can be a tough one for many people. Many youngsters find it difficult to control the lure of spending the money earned each month. While spending a certain fixed amount on one’s own comfort is understandable, going overboard with spending especially making dues in credit cards and taking credit card loans is unwarranted. It can not only ruin your finances, but also affect your credit score which may affect your future loan applica
tions.
Tax
planning is a significant part in every working individual’s life. Making a transition from student life to corporate life can be tough as many youngsters are not aware of the various tax obligations and don’t consider consulting a CA a priority. Tax planning must be started as soon as one starts earning to make sure all effective tax planning and saving measures are incorporated. The amount saved on tax may help you in repaying the education loan or to plan for a small savings scheme. A lot of people especially those joining the corporate world for the first time do not focus on their tax planning until it is too late and end up paying more tax compared to someone with the same salary structure but with a proper tax planning.
Employment
brings with it financial and social obligations. Considering the uncertainties of life, it is imperative for a newly earning person to embrace life insurance to act as a security cover in case of any unforeseen event. Depending on the plan opted, life insurance plans offer a security cover for the parents and other dependants in case the policy holder expires. Life insurance policies are also great tax saving instruments which link tax savings with investments. Even if you are covered under your company’s group health insurance policy, it is advisable to take a health policy individually. One reason which justifies this buy is that the younger the insurer is, the lesser will be the premium. You can take advantage of no claim bonus during renewals at a later stage. Secondly, as most health insurance policies have exclusions for the first three to four years, taking a policy when you are completely healthy can bring you the advantage of complete coverage at a later stage.