Picture this. You land the perfect-fit job straight out of University with good benefits and a great workplace culture. You plan to save a portion of your monthly earnings to buy your first car but you lose control because Jimmy Choo is having a 50% sale and it happens to be on payday.
Before then you can’t help but do the payday countdown like the rest of your colleagues. No doubt, earning your own money and holding down a job is an exciting time for any young worker in his or her work life.
Shopping, eating out and painting the town red are on the to-do list of every young earner as youngsters are known to want to have fun.
However, spending unwisely and lavishly can mean you can soon run out of money – and that just washes out the colour in your life. Nobody wants to feel left out when his or her friends go out to celebrate a birthday or promotion, but when your car refuses to move or you are faced with exorbitant mechanical charges but you are short of funds, it’s a sad reality.
Saving for rainy days and future plans should be paramount for all young workers. We all have days of going a little above the budget margin and splurge on stuff we don’t really need at a particular time from time to time, but it does not have to be that way and saving now will benefit you in the long run.
Here’s a guideline on how first-time earners can channel their monthly surpluses effectively
1. Draw up a budget and stick to it
You need to draw a budget. This will help you get a clear idea of your income versus your expenditure for the month. It will guide you on how much you must save. It will help you to track where and on what your money is spent on.
It will draw your attention to unnecessary spending and will help you to eliminate it. When you budget, be honest with yourself and examine your “real” spending habits. Forcing yourself to see the realities of your spending habits should make it easier for you to avoid daily and month-end temptations.
2. Adopt a savings mindset
According to Old Mutual, the majority of its customers find that they are spenders as opposed to savers. This can be changed by making small changes and better choices.
You can correct this by making small changes to your habits. You can open a fixe deposit account and transfer money into it. One of the best ways to help you save money is to never “see” it via debit or stop orders. Withdrawing money from this account means you will have to give the bank 30 day’s notice, making it harder to access for wants. However, do note that each bank may have its own notice period.
3. Avoid credit cards
The freedom a credit card can give you can be tempting. Paying it back feels like you are a prisoner of debt. Most people prefer using a paying method that does not involve having cash on hand. The allure of the credit card can draw you into a world of debt if you cannot make payments on time or at all. Cash is best and safe when you are trying to keep a clean financial record.
Talent360’s basic steps to help you clear debt:
• Pay off the most expensive account first. This could be debts that attract the highest interest rates, such as your credit cards and shopping cards;
• Once you have cleared off your most expensive debts, move on to settling the next most expensive debt by paying more than the minimum instalment amount.
4. Set goals
Set saving goals that you know you will definitely follow.
Talent360 shares some tips.
• Start small and set achievable goals that will keep you motivated;
• Pay your utility bill before spending money on anything else;
• Create a list of things that need to be paid for or bought on payday and stick to it;
• Before you buy things, shop around and compare prices. Bargains will make you feel good and your pockets look healthy;
• Put some money away for unexpected or emergency expenses;
• Learn to say “no” to yourself.
Assess the situation – ask yourself do I really need it or do I crave it? If you can’t afford it, don’t buy it;
• Include some money as a reward to keep you motivated.
5. Pack your own work lunch
Taking lunch from home will ensure that you save money.
If you know you have a sweet tooth or can’t resist munchies at your work canteen, bring your own sweets from a cheaper supermarket or make your own munchies instead of buying them from the canteen.
Buying food daily will burn holes in your pockets when you tally your monthly spending in your budget.
6. Make lifestyle adjustments
If you smoke three packs of cigarettes a week or visit the beautician twice a week, cut down. Make lifestyle choices that can have a positive impact on your savings. If you have clothes or accessories that you don’t use, sell them online or at a car boot sale. Be wise in your lifestyle choices. You shouldn’t take it as an inconvenience, rather it should help you make informed decisions.