7 Things to do when you receive your first salary

Your first salary might give you a sense of independence and boosts your confidence. And, the first thing you usually think of doing, when you get your first salary, is to buy something for your parents or give a party to your close friends and family. You could also splurge it entirely on yourself. While it is understandable to enjoy your first salary, you should also think of possible ways to make the most out of your salary. Your real financial journey starts when you receive your first regular paycheck and it is your responsibility to use it wisely.

Here are things to do when you receive your first salary:

Make a budget

A budget will help you plan your expenses and find possible ways to save. You know how much money you will receive each month. List all the necessary expenses you will incur for the month and see if you can reduce any of those expenses. For example, if you travel by a cab to your work then you can cut down on the travel cost by opting for public transport like bus, metro, etc. Knowing your monthly expense budget will help you determine how much money is left with you to invest and save.

Set your goals

Goal setting is important to know how much money you will need in a few years from now. Understand what are your short term and your long term goals. Accordingly, start saving for them. For example, your short term goal is to buy a car, then, you have to save as per the cost of the car you plan to buy.

Invest in financial products

After setting your goals and making a budget, you need to choose in which financial products you want to invest. And for this, it is important to learn about various financial products available in the market. As you have just started earning, your risk appetite will be high and so, you can try investing aggressively.

Open a recurring deposit/term deposit

Since you have just started out, you might not be able to keep aside a large amount to invest. You can open a recurring deposit account and start saving little every month. Or, after a few months if you are able to save larger amount then you can also think of investing in fixed deposit, which can fetch you interest of around 7 to 8 percent per annum.

Start an emergency fund

Right from the beginning, start keeping aside a part of your salary as an emergency fund. Emergencies can come in your life at any point of time. You need to be prepared for the small emergencies and protect yourself from financial difficulties they would caude in the future.

Get yourself insured

Your emergency fund might help you in case of small financial emergencies but, insurance will take care of larger financial emergencies like accident, critical illness or even death (to take care of your dependents). Getting insured might not be a priority to you right now, but, it is better to take insurance from the start of your career and benefit by having to pay less premium.

Start planning for retirement

You should start planning for your retirement from now itself. The earlier you start the more benefits you will get in the future. Most companies have an employee’s PPF scheme. If the company you are working at does not provide this facility then you can open a PPF account on your own in any nationalized bank. You also get tax benefits by opening a PPF which helps you save more. Apart from PPF there are various financial products available in the market to help you save for your retirement.