As a recent graduate, and as you enter the workforce, now is a good time to start thinking about your financial planning, as starting now is what will help you avoid a future life of debt. No matter how much, or how little you earn at your first job – there are always some small steps that can be taken to adapt the right habits from the beginning to secure your financial future.
1Life shares 4 helpful financial considerations graduates can take when starting their first career. ?An emergency fund
?An emergency fund
Once you start your first job - make it a personal goal to start building an emergency fund that you can access on those inevitable rainy days. Whether its car problems, your phone breaking or having to settle an unexpected expense, you could be set back a few thousand rands. Or even worse, you experience an unforeseeable issue at work which may result in you no longer having a job, putting you in a sticky corner financially. The rule of thumb is to try an aim for at least three times your monthly salary, being available in your emergency fund – to get you through any tough times.
Settle your outstanding student loans and any other debt
Every cent counts. This means that even if you are only able to put away a little extra every month into repaying your student loan or clothing account, it will still make a difference and shorten your repayment period. Also, look at areas in your daily/monthly expenses where you could cut down on your spending, and put some of that money towards repaying your outstanding debts.
Consider securing your biggest asset – yourself!
One of the biggest misconceptions when you’re young, is that disability, dread disease and life cover is only something to consider when you are much older. Everyone thinks they have time, however, life has no guarantees. If you were suddenly involved in a car accident, which leaves you seriously injured, would you be able to maintain your existing lifestyle and cover your existing debt, and cover any life changes without your regular income? Or, what if you were diagnosed with a life threatening illness that keeps you from work; do you have enough savings to see you through your medical and day-to-day expenses? If you are unsure if you can afford this, rather contact a reputable long term insurance company directly, who can talk you through what policies you should be considering right now. A massive thing to consider is the younger you are when you get cover, the less you will pay on premiums.
Avoid debt by all means
As tempting as the idea of getting access to the trendiest fashion gear on credit may be – try to avoid this – rather save for the things you need – as with credit you merely end up paying more in the long run.
Of course, this is the time to learn as you journey through this new stage in your life and how you spend your money is part of this learning experience. Try stay focused on achieving a more secure financial future, by making some small steps that could be life changing in the future.