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Saturday, July 13, 2024

Ways to Make the Most of Your First Salary

The first job is one important milestone in a person’s life and above that the first salary that is credited is all the most important which a person remembers all throughout his/hers life. The world has changed drastically over the years and young earners are more inclined towards splurging their first salaries on things they’ve always desired to have with their own money. However, a bit of financial planning if started from the beginning helps in building a good foundation in the years going ahead in a person’s life.

A well thought of financial plan makes a person’s life more comfortable in the years that come by, and even in times when things are not going good, as they have a financial back-up accumulated from the years of saving which they did right from the start.

Investments are one of the biggest factors that plays an important role in how a person stands after years of working, as without smart investments a person would not be able to sustain financially if there is a sudden loss of job owing to unavoidable circumstances.

Additionally, first time earners also have to be well acquainted with the nitty-gritty’s of income tax as it helps saving a lot of money if there are specific investments from their side. Calculating income tax is also something young earners should be looking at. To make things clear on that turf, they can calculate income tax online via various financial platforms like ET Money which has its own income tax calculator which gives the exact numbers with clarity.

Here are a few simple moves that ones should focus upon right after getting their first paycheck.

Tax Saving Fixed deposit

There are many investment options available, but one of the most simplest and uncomplicated ones is setting up an auto debit fixed deposit. This is also called an auto sweep facility, which is provided by various banks.

Here, when your account balance rises above a pre-determined threshold, the remaining amount is automatically transferred to an FD, that fetches a higher interest rate than a savings account. One can start this facility either by calling the bank’s customer care, phone banking or through the bank’s app.

Mutual fund SIPs in ELSS

An SIP (systematic investment plan) invests a specific amount of money every month in a particular mutual fund. One can choose the amount, the date of investment and the tenure of the SIP which will be debited from the bank account on the pre-determined date. This is an ideal way of saving smaller amounts on a regular basis, which builds up a reasonable amount in the future. SIPs done in ELSS Mutual Funds are eligible for tax rebate under section 80C.

Invest in a term and health insurance

If a person who is young starts a term insurance, the premium is relatively low, which helps in protecting you & family in case of emergencies. Secondly, get yourself a health insurance as it can help in saving you money on any medical emergency.

Start an emergency corpus fund

Life is full of surprises and no matter how young or talented you are, there can be grave emergencies which have to be handled which comes unknowingly. Saving for such sudden expenses via an emergency fund is the smartest thing to do for young earners. The earlier they create an emergency fund, the better.

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