Your first job, right after graduation brings an ocean of opportunities. The excitement of getting your first paycheck is incomparable. But, it is easy to get carried away with the extra cash you receive every month. We have listed below, the common mistakes people make at their first job that can easily be avoided by taking some simple steps:
You might not necessarily think about savings when you are still young, but earlier you begin investing, more returns those investments yield. Savings Account in different banks yield interests starting from 4%. If you are not investing in high risk investments like mutual funds or equity shares, you can always opt for savings account and avail guaranteed steady returns. You can even opt for Fixed Deposit for a pre-decided tenure ranging from 7 days-10 years. Fixed deposit interest rates are higher than that of savings account, but they come with a lock in period as well. Both these options can give you guaranteed returns without worrying about any market risks.
Do not start ticking off your wish-list as soon as your salary gets credited. It is tempting to make a big purchase or spend off the money in buying expensive things. But, most of the times, a big purchase of a car or a bike or electronic gadgets is accompanied with maintenance and insurance charges. Instead, plan out your bigger expenses over a longer duration to ensure that the payment of important expenses like household utility bills is not procrastinated.
Credit cards are an easy transaction option. However, they also tend to increase your credit payments for which you rely on your next month’s paycheck. As financial experts advice, spending your money before earning it is a poor financial choice. Resorting to credit and not being able to pay it off later, not only costs you high interest payments, but also reduces your credit score. Keeping your credit spending within your repayment capability helps you keep your expenses in check.
As you start earning, prepare a personal budget to track all your expenses. This will help you in eliminating the unnecessary expenses. Moreover, it also ensures that your expenses do not exceed the income every month. Keeping an emergency fund aside in your budget also ensures that you simultaneously maintain an emergency fund, thus having enough money to spend in any financial crisis.
While the first job brings with itself the thrill of independence, it also comes with a responsibility of making wise financial decisions. Keep these aspects in mind when you get your next paycheck.
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