Getting the first job

A new job is now at a new beginning; it’s a path to create a happy ending

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Graduating from college and joining the "real world" is a turning point in your life. Making the move from education to employment comes with a lot of additional duties. You're stepping into adulthood with dreams, aspirations, and possibly student loan debt. 

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After graduating from college, you will have a couple of options: some of you may return home, while others may relocate frequently. Relocating back home might not be your first choice, but it might be something to think about if you want to save money. Select a career path after college that fits both your short- and long-term financial objectives by weighing your options and interests.

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Renting with roommates

You most likely have a job that requires you to move to a metro city, in which case you should expect higher rent. Considering the cost of living in India in 2023, reports indicated that the average Indian spends Rs. 20K-50K per month on rent in urban areas. One way to ease into the real world is to live with trustworthy roommates in PG accommodations or shared apartments. Here, the key choice is to consider the appropriate standard of living at this stage and how much money you want to save.

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Moving back home

Following graduation, you might not know exactly where to go. Moving back home could be a wise financial move if you're starting over, paying off student loans, or are between jobs. You could save for several months while looking for work and your next place to live, with less strain on your finances. Be aware that your privacy and independence will be impacted. Although it can be simple to revert to old habits, make sure you are saving with intention.

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Starting the new job

While some of you want to begin your career with start-ups, others would prefer to work for established companies. For those doing early career path planning and knowing they want to do both a startup and a mature company at some point, there’s always the question of which should come first. Well, there’s no right or wrong place to start. A lot depends on how you define your skills and how willing and patient you are in either case to adjust. Go beyond your comfort zone if you're willing to take chances. There are hundreds of startups waiting to welcome you if you prefer flexibility over salary. Conversely, don't hesitate to join a large corporation if you're concerned about working in an organised environment, a reputable brand name, consistent and fair pay, and employee benefits.

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Your first payday stands out as the best among the rest.

The day you receive your first paycheck is the milestone that marks the beginning of your professional journey. It's overwhelming to earn money on your own for the first time. You're not going to ask your parents for pocket money anymore; you will become financially independent; you may want to treat yourself. And why not? You deserve a treat for yourself for achieving this milestone. 

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Remember! No matter where your career takes you, the memory of your first salary will always remain special. We encourage you to save a portion of your salary as a reminder of the aspirations, challenges, and achievements that will shape your path.

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Living by budget

It's often the first time you're faced with budgeting, saving, and making financial decisions independently.  For a good start, you can start living by the 50/30/20 budget rule where you allocate 50% towards living expenses (needs), such as household expenses and groceries, 30% towards discretionary spending (wants), and the final 20% towards your savings. However, if you’re looking to pay off old debts, then the essential expenses can go up to 60-70% as well. On the other hand, if you’re still living with your parents, you can save on food and accommodation costs then your contribution towards savings can increase to even 50%. 

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Settling up previous Debts

Some of you will have student loans going on from your graduation, paying the EMIs on time and settling up the loan should take preference over savings. On time repayment and increasing credit age, two factors that have a high impact on CIBIL calculation, will help you improve your CIBIL score. It generally takes 3 to 6 months to get your first credit score and once your CIBIL score is above 700, it will be considered as good.  A high credit score can increase your chances of getting higher limits on your loans at economical rates which you might require in future for fulfilling long term goals like buying a house.

Know the interest charged by your bank and whether any other bank is ready to provide a similar loan at a cheaper rate. You can consider transferring the loan to a new bank after evaluating the costs and processing fee, which is generally 0.25% to 2% of the outstanding loan amount, associated with the loan transfer. If it will save you money, proceed.

Credit Card comes with an interest-free period ranging from 20 to 50 days however, it can be expensive if you miss out on timely repayment of dues as interest rates levied by lending institutions can range from 13 to 53%. Prioritise your credit card payments for maintaining good financial health, avoiding unnecessary fees and penalties, protecting your credit score and avoiding falling into debt traps. You'll not only save money on interest, but you'll also potentially improve your credit score too. That's because reducing credit card debt directly impacts your credit utilisation, one of the biggest contributing factors to credit scores

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Buying a Health Insurance

The majority of employers provide employees with health insurance. This cover, though, might not be enough in some circumstances. Certain aspects of your treatment, like co-pay (fixed out-of-pocket amount paid by an insured for covered services) or room-rent limiting clauses, might require additional coverage. A recent report by ICICI Lombard Insurance Company revealed that as many as 76% of insurance policies offered by employers have co-pay and room-rent limiting clauses. 

Your company could have an excellent group health insurance policy, or a really bad one - you need to analyze the policy document to know exactly how much coverage you have, and how good it is. It's advisable to always treat your employer's insurance policy as a secondary cover, should your primary policy (that you take as an individual, with no connection to your company) run out. Examine the coverage that each policy offers, taking into account things like prescription drugs, hospital stays, doctor visits, preventive care, maternity care, mental health services, and more. Make sure the primary policy covers the medical needs that are unique to you unlike the employer sponsored group policy which has defined benefits.

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Building an emergency fund

You may be an excellent employee. However, you may still get fired if the business is down and your employer takes the decision to down-size the firm. Do you have sufficient funds in your bank to manage your daily expenses or are you looking forward to going back to your parents and asking for pocket money? Most of you would not like the latter alternative. In these unpredictable job markets, you should be prepared for any kind of unforeseen events like job loss. As a rule of thumb, have an emergency fund covering 3-6 months of necessary expenses like EMIs, household costs, rent, and conveyance.

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Invest in your Dream

Do you recall your childhood fantasies of owning a large home with a backyard or converting that extra room into an art studio? However, that plan was shelved when you realized you couldn't fulfill your desires to attend the famous Rio Carnival festival of Brazil or take your ideal vacation to Paris. The lack of readily available funds can cause plans and dreams to fall through the cracks additionally due to your inadequate planning for your dreams.

Clearly define your objectives, both personal and professional, and give yourself targets.Only if we are committed to excelling in our chosen field of work and work on our goals consistently will we be able to reach them. You can watch your wealth grow and have a nice nest egg by the time you're ready to hang up your boots if you start saving a portion of your earnings early and make wise investments through SIPs in mutual funds. Direct investment in stocks and IPO investing is not prudent practice especially when you don’t understand the risk of owning stocks directly.  It's crucial that these financial and investment decisions are thoughtfully considered and not made hastily. A little bit of foresight and a good helping of common sense can help you achieve your dreams realistically. Get closer to fulfilling your goals by supplementing your day job with additional income sources and eliminating unnecessary expenses.

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Key Takeaways

• With technology and social media at our fingertips, it's important to limit your time spent on social media. Invest that time on yourself to inculcate new skills and knowledge.
• Spend money deliberately by asking "why" before you buy. Is this really something I need? Do I own anything comparable? Could I wait? Additionally, don’t get trapped in the marketing techniques of flipkart’s big billion sale or Amazon’s Great India Festival. Don’t buy anything unnecessarily in the sake of low prices and huge discounts offered in sale. There are high chances that the product’s price will come down to the same rate as offered in the sale once it is over.
• Studies have shown that more than 97% of day traders lose money over time, and less than 1% of day traders are actually profitable. You don’t want to lose your hard earned money going that way. Rather start small with a much disciplined approach of SIPs in mutual funds and ETFs.