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Ah, that feeling when your phone goes off telling you that your first salary as a permanent staff member has been paid into your bank account...
The urge to go on a spending spree will hit you. It's normal. But just remember you can't make it rain before you know what you need to spend your newfound wealth on.
That begs the question: what should you be doing with your money?
We spoke to Lizl Budhram at Old Mutual Personal Finance for her advice on what to do with that first paycheck before it burns a hole in your pocket.
Budget! Budget! Budget!
Lizl stresses the importance of drawing up a budget: “Budgeting will help you work out how much disposable income you have available, and track where and on what your money is spent. It will also help make you aware of unnecessary spending and assist you to eliminate some or most of it.”
READ MORE: 5 signs you're living beyond your means
Change your habits
“The majority of consumers find they are “spenders” as opposed to “savers”. You can change this by adopting good habits from the beginning, such as starting a savings plan that you commit to paying into regularly.
“It is important to start early, and to save enough. Put your savings into a structured investment vehicle, particularly if you have long-term savings goals. If you postpone starting to save for retirement from 30 years before to 10 years before retirement, you will have to put away 10 times as much each month,” says Lizl.
So how much should you actually be saving?
Lizl says your goal should be to save at least 10% of your pre-tax earnings. “Consider paying yourself first by starting a regular savings plan that could form the backbone of a fund from which you will be able to draw money to cover the necessities of life.
“Arrange for a fixed amount to be deducted from your bank account every month so that it becomes part of your expenses. And remember to factor this into your monthly budget.”
READ MORE: 9 small ways to save your hard-earned money
Here are 5 additional tips from Lizl to keep in mind when you get your first pay check
Face your financial realities: Take stock, be realistic and get the right advice. Live a life you can afford, not a life you want people to think you can afford. Realise the money you earn is all you have to work with.
Balance your priorities: Balancing between the wants of today and the needs of tomorrow is key – get this right from the start and you’ll set yourself up for success later.
Draw up a budget and stick to it: It will help you understand where your money is being spent. You can then make informed decisions about what to change so that you can use your money more effectively.
If you have debt, tackle it: Pay your debts off one at a time. If you can, avoid store cards, credit cards and store accounts.
Draw up a financial plan: Consult a qualified financial adviser and draw up a plan for your future. Do not put this off. Your plan will take your current situation into account, as well as future goals and dreams. Your adviser will recommend appropriate solutions, and prioritise your needs. Once a year, revisit your plan with your adviser and evaluate progress and make any changes required.
