ASK any young person at their first job: What are you going to do with your salary? And the answer is probably “go on a spending spree!”
But experts warn us to be careful that we don’t start learning some bad money habits.
Roz Thomas, managing director at Hill+Knowlton Strategies SA, said it’s tempting to blow your first salary on big treats.
Instead, she offered advice for young people starting careers.
List your income
Write down your monthly salary after tax. If you earn any other money – such as, if you buy and sell clothes – then add this to get a total of your monthly income.
List your expenses
Get your bank statements from the last three months. Look at all your expenses and list them into fixed and changing expenses.
Fixed expenses are rent, travelling costs, medical aid and insurance. You need to pay these expenses. With a detailed budget, you can cut a few down, like renting a cheaper flat, or car pooling with friends.
Changing expenses are payments you make that don’t happen every month such as a dinner at a restaurant, new work clothes or internet subscription.
Income minus expenses
After subtracting your expenses from your income, pay off your debts and increase savings.
Wants versus needs
You need to decide if your expenses are things you need or want.
You need food, accommodation, travelling costs, water, electricity and so forth. However, you don’t need luxury clothes and dinners in fancy restaurants. By buying more affordable food, carpooling or sharing accommodation, you can save money.
Draw up your budget
Once you have your expenses and income, you can then plan your budget for the next month.
Limit how much you will spend on food, power and luxuries and see where you can save more.
