Here's How You Can Make the Most Out of Your First Paycheck

You’re finally here. You’ve probably finished school for good, and you just received your very first paycheck. It signifies the hard work that you have put into job hunting, as well as in the first month of your new job.

When you were younger, you probably thought of the countless number of things you wanted to do once you received your first full-time salary. Perhaps it was purchasing a gaming console that you’ve always wished for, or perhaps going on a shopping spree at the mall.

But now that you have received your first salary, are you really going to spend it all on your material wants? How you make use of your first (and subsequent) paychecks will affect the way you spend money in the future, so it is important to practise healthy financial habits from the start and cultivate it as a habit sooner rather than later.

So, here are five things that you can do to make the most out of your first paycheck.

1.TREAT THOSE WHO HAVE HELPED YOU ALONG THE WAY

Now that you have got yourself a full-time job and are earning money, it is time to repay those who have helped you along the way.

One of these people could be your parents. While no amount of money can recompense their years of efforts, doing them sweet little favours will surely make them feel on top of the world.

Take them out for a sumptuous dinner to give them a full stomach and a happy heart. Buy your dad a shirt and your mom a posh scarf so they will have something new to wear. Or gift them a restored wedding photo to hang in your family living room.

If there was someone else who has helped you get your job, or has given you invaluable advice, now is also the time to show how grateful and appreciative you are.

These simple yet meaningful gestures are not only a gratifying way to spend your first salary, but also a way to maintain a healthy relationship with your loved ones.

2. 
   START BUILDING AN EMERGENCY FUND

Because an emergency can occur anytime, building a reserve of cash is a brilliant idea. When you have an emergency fund, you have a back-up in case of a medical emergency or sudden job loss.

So instead of splurging on shopping and other luxuries, prioritise building up your cash reserves. Take at least 10% of your income and put the money into a designated savings account. It is typically recommended that you save three to six months of expenses into your emergency fund in order to be able to weather larger financial events or emergencies.

Saving for the future is a big responsibility. Surely you wouldn’t want to end up penniless or digging out of debt just because you failed at building up your own savings. Build up a cash cushion for yourself to cope with unforeseen crises.

3. GET HOSPITALISATION INSURANCE

Getting yourself a hospitalisation insurance plan is yet another way to spend your first paycheck. Why? Because such a plan can cushion you against sudden medical emergencies.

You’re probably thinking, “Why get this one if I already have reserved cash for emergencies?” Well, you can prevent the depletion of your savings by being insured. For example, if you get into an accident and get hospitalized, your insurance can help cover the hospitalization costs.

Your emergency fund can help you to tide over your daily expenses and necessities while you are still on medical leave and are unable to go to work. Hence, having an emergency fund as well as a hospitalization insurance plan can help to complement each other in the case of such accidents and emergencies.

One of the hospitalisation plans you may consider is AXA Shield. AXA Shield is a medical reimbursement plan that complements the Singapore MediShield Life Plan. The plan covers healthcare needs such as 180 days of pre-hospitalisation treatment and 365 days of post-hospitalization treatment. There are also increased claim limits for hospitalisation treatments compared to Medishield Life.

Moreover, AXA Shield is the first Integrated Shield Plan to offer a General Practitioner (GP) Panel, with over 340 GP clinics in Singapore. It also offers over 400 medical Specialist clinics across various specialties.

If you already have a hospitalization plan, the next thing you could do would be to get life insurance. Life insurance provides financial assurance and confidence for both you and your loved ones in the case of an unexpected event, such death or total and permanent disability.

4. MAKE THE JUMP INTO INVESTING

The key to investing is to start as early as possible. When you start while you’re young, you can reap bigger rewards in the future.

If you want to get serious with investing, we recommend exploring investment options that can help you fulfil your financial goals easily.

Investment solutions that you can consider are Real Estate Investment Trusts (REITs), Exchange Traded Funds (ETFs) or investment-linked insurance plans. These plans provide flexibility and allow you to grow your money with protection coverage that fit your needs and budget.

These different methods of investment can help you to earn passive income on top of your primary income.

Once you’ve begun to reap the benefits from your investments, you will thank yourself when you realise that you have grown your wealth substantially. But first, you have to take the most important step: get started. Learn more about passive income-generating instruments here.

5. TREAT YOURSELF!

After spending your paycheck on your daily necessities as well as the aforementioned points, remember that you can also treat yourself! You’ve worked hard in your initial job hunt, and you’ve probably done your best in your first month at work.

Of course, we don’t mean that you should splurge on everything that you want, but it doesn’t hurt to get yourself that dress that you’ve wanted for a while, or to treat yourself to a good meal at your favourite restaurant.

As long as you are in control of your finances and have a clear idea of how much you can spend in a month, then feel free to treat yourself once in a while. It would help if you budget your monthly salary - keeping percentages for investments, savings as well as your own spending needs. By establishing a budgeting plan as soon as possible, you will find it progressively easier to stick to your budget..

SPEND YOUR FIRST SALARY WISELY

Receiving your first paycheck from your first full-time job is one of the momentous events in your life – it’s the beginning of your financial independence. Learn how to spend it meaningfully and develop good financial habits, such as saving money.

Grab the above ideas as inspiration to prep for the future, experience some comfort, help your family, and achieve a sense of fulfilment.

Disclaimer:

This article is for general information only and does not take into account the specific investment objectives, financial situation or needs of any particular person. The views expressed herein do not necessarily reflect the views of AXA Insurance Pte Ltd and should not be construed as the provision of advice or making of any recommendation. There is no intention to distribute, or offer to sell, or solicit any offer to purchase any product. We recommend that you seek the advice of a qualified financial advisory professional before making any decision to purchase an insurance or investment product. Whilst we have taken reasonable care to ensure that all information provided was obtained from reliable sources and correct at time of publishing, information may become outdated and opinions may change. We are not liable for any loss that may result from the access or use of the information herein provided.