Well done on securing your first job!
If you're starting on your first job, whether it's as a cashier, waiter, admin, accountant, engineer, or in any other available position.
Having your first salary is the best feeling ever, right?
Feel free to spend your hard-earned money however you wish. Enjoy the freedom to spend as you please and make your own purchases.
This article would be a great fit for freshly graduated individuals starting their first job, or anyone looking to improve their financial management skills.
Here are some beneficial recommendations you can look at:
One of the first steps toward financial success is creating a budget. A budget allows you to track your income and expenses, ensuring that you are living within your means.
Start by listing all your sources of income, including your salary, any side gigs, or passive income. Then, make a list of your monthly expenses, such as rent, utilities, groceries, transportation, and entertainment.
Once you have a clear picture of your income and expenses, you can allocate your money accordingly. Aim to spend less than you earn, and prioritise your needs over your wants.
Consider using budgeting apps or spreadsheets to help you track your expenses and stay on top of your financial goals.
Remember, a budget is a flexible tool that can be adjusted as your financial situation changes.
It's important to remember that all individuals are different, so it's not effective to constantly compare yourself to others when it comes to meeting your own needs.
Reflect on what is around you to assess what you currently have and what improvements can be made to enhance your quality of life.
Take your time to carefully consider your desires before falling for marketing tricks. It's important to think about the actual worth and benefits of a purchase before committing to it.
As an example, in Malaysia, cars are considered a necessary mode of transportation for individuals due to their better safety features compared to motorcycles and the convenience they provide in carrying stuff.
Deciding between a hatchback, sedan, or SUV is going to depend on how frequently you plan to use the amount of space you have. Definitely, a larger size will be more beneficial. But is it the most important thing to you?
If you have student loans or other debt, it's important to have a strategy for paying them off. Start by understanding the terms of your loans, including the interest rates and repayment options. Consider creating a debt repayment plan that prioritizes high-interest debt first.
If you're struggling to make your loan payments, explore options such as income-driven repayment plans or loan consolidation.
It's essential to stay on top of your debt and make payments on time to avoid late fees and damage to your credit score. With a solid repayment plan in place, you can work towards becoming debt-free and achieving financial freedom.
There will always be pros and cons when deciding whether to purchase a new or pre-owned item.
However, it varies for each person as some may prioritise security, price, quality, and other factors.
Keep in mind that the price tag doesn't always reflect the quality or value of a product.
It's important to consider the quality and long-term usage when deciding on a new item to purchase. If you're unsure about a product, it may be worth trying out a second-hand item first for a shorter period of time.
And naturally, people will have different opinions on this matter, but there is no definitive right or wrong answer.
as the Malay proverb says: 'ukur baju di badan sendiri'.
As you embark on your journey into adulthood, it's important to embrace new experiences while being mindful of your budget. Exploring new things can be both exciting and fulfilling, allowing you to make the most of life's adventures.
Just like when you're purchasing a brand new or pre-owned item, the same concept applies to owning and renting.
However, there will be significant differences in terms of expenses and commitments.
When it comes to the subject of owning versus renting, two common examples that often come to mind are cars and houses.
There are certain situations where owning can be more advantageous, but renting also has its own set of benefits.
For fresh graduates, it may not be advisable to purchase a house at a young age, especially if you anticipate frequent job changes before establishing stability. Then, in that moment when you already want to settle down, you can make a decision about the type of house that would be ideal for you and your family to live in.
Many people find them necessary for commuting in cities with accessible public transportation. Therefore, having a car may not be advantageous for them, as they may not be able to make full use of it.
Instead of committing to a car for several years (up to 9 years) when you hardly use it, it can be quite wasteful. Car companies release new models and designs every year, so it might be wise to resist the urge to buy those cars.
It's important to keep in mind that, while you may have a good income, it's crucial that you differentiate between your wants and your needs.
Have you ever come across this rule? Indeed, it's a common experience that many of us can relate to. However, let's take a moment to review:
50% - Your Monthly Commitment
30% - Your Needs
20% - Your Saving and Investment
or
70% - Your Monthly Commitment
20% - Your Needs
10% - Your Saving Plan
* your monthly commitment can be referred to as: rent, loan, credit debt
Here is a helpful guideline that you can adjust to better suit your financial situation.
Performing calculations like the one shown above can have a significant impact on how you handle your finances. You can't get rich only by amassing more cash. However, individuals who practice effective financial management tend to be more financially secure.
From now on, it would be beneficial to use your phone to calculate the amount you have saved so far. It is highly recommended to have savings equivalent to 6 months of your salary.
If you currently don't have that amount, it might be a good idea to start improving your money management skills.
It's never too late to start learning about personal finance.
Saving money is a crucial part of financial success. Start by setting up an emergency fund, which should ideally cover three to six months' worth of living expenses. This fund will provide a safety net in case of unexpected events like job loss or medical emergencies.
In addition to an emergency fund, it's also important to save for your future goals. Whether you're planning to buy a house, start a family, or travel the world, setting specific saving goals will help you stay motivated and on track.
Consider automating your savings by setting up automatic transfers from your paycheck to a savings account or a retirement fund.
Remember, saving is a habit that should be developed early on to secure a financially stable future.
Credit is an important aspect of your financial life, especially when it comes to major purchases like buying a car or a house.
To build and maintain good credit, start by understanding the basics. Your credit score is a numerical representation of your creditworthiness and is based on various factors, including your payment history, credit utilization, length of credit history, and types of credit.
To manage your credit effectively, make sure to pay your bills on time, keep your credit card balances low, and avoid opening unnecessary credit accounts.
Regularly check your credit reports to identify any errors or fraudulent activity. Building a good credit history early on will benefit you in the long run and make it easier to obtain loans or credit in the future.
Insurance, or Takaful, is a crucial component of financial security. Start by ensuring you have health insurance coverage, either through your employer or by purchasing a plan independently.
Health insurance, or Takaful, provides protection against unexpected medical expenses that could otherwise be financially devastating.
Additionally, consider other types of insurance, such as auto insurance, renter's insurance, and life insurance.
These policies offer protection in case of accidents, damage to property, or loss of life.
While Insurance, or Takaful, may seem like an additional expense, it provides peace of mind and financial protection in times of need.
Getting Insurance, or Takaful, is the first layer of financial management.
Hence, you need to make it a priority to pay the premium as part of your monthly contribution before starting to venture into other types of debt, such as motorcycles, cars, and houses.
Investing is a powerful tool for growing your wealth over time. While it may seem intimidating, especially for first-time job seekers, it's important to start investing early to take advantage of compound interest.
Begin by educating yourself about different investment options, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs).
Consider consulting with a financial advisor to determine the best investment strategy based on your risk tolerance and financial goals.
Remember, investing is a long-term game, so stay focused on your goals and avoid making impulsive decisions based on short-term market fluctuations.
