For people who have started their first jobs one of the things to look forward to is that first paycheck. But what do you do with your new found cash? Do you spend it immediately or save it for a day where you’ll need it? If you’re unsure, here are some tips to help you budget your first paycheck.
Work towards paying off debt
For someone who has just finished university and has started a new job, one of the biggest things to worry about is paying off your student debt. Paying off any debt should be one of your biggest concerns as high-interest rates can have a negative impact on your long-term financial standing. So make sure that you set aside some of that first paycheck, and future ones, to pay off your debt early on.
Create an emergency fund
From your car breaking down to medical fees, you never know when you may need extra cash to help you out. So make sure that starting with your first paycheck, you set aside some cash to create an emergency fund. This way you won’t have to worry about taking out a loan to deal with unexpected costs.
Draw up a budget
Once you’ve started putting some money aside and spending it on the essentials, you’ll see your money start to disappear. So before the end of the month, you should note down what you’re spending your money on. You should include everything, from your grocery shopping to your night out. This will give you an idea of where you need to cut back on your spending and where you can save some cash.
The key is not the amount you save every month but to remember to put that money aside. Even if all you can only afford to save is R100 per month, all you need to do is to remember to transfer it to your savings. As you keep saving over time you can then increase this amount. This is a long game, so you just have to remember to put away that cash every month.
Being responsible for how you spend your money can be a hard habit to develop. You may have to cut back on those nights out with friends or cut down on your monthly clothes shopping. But in the end, you’ll have some money saved up so that you can pay for the important things.