First job, first salary?

FINANCES: TIPS TO HELP YOUNG EARNERS Staying clear of bad debt is a vital habit to develop early in your career.

Earning your first salary is a big milestone that calls for a celebration. It is also an opportunity to set yourself up for financial wellness that will help you to realise the dreams you hold for your life. The first step is to draw up a personal budget that covers all your vital expenses like food, rent and transport. The budget should not include wants like the latest designer clothes or a new cellphone but only those expenses that you cannot live without. Also establish what benefits you are receiving from your employer and take out your own medical aid and pension fund if your salary package does not include this.

It may seem too early to prioritise retirement savings but there is a principle of compound interest at play in savings. If you start saving now, the principle starts taking effect in a few years to significantly boost your investment.

The next step young professionals can take to build their financial muscle is to set up an emergency savings fund for unforeseen events like being retrenched or repairing their car. You may even want to prepare to help family members who may experience financial challenges in future.

Staying clear of bad debt is also an important habit to develop early in your career as this will enable you to weather financial storms and save more to reach your financial goals.

A great exercise to do when you start earning, is to write down your financial goals. This will motivate you to save, as you are applying self-discipline for a specific goal.

It is advisable to see a financial advisor when you start earning as these financial experts could advise you on the portion of your income you need to save and invest to realise your specific financial goals.